Letter to the National Asociation of Regulatory Utility Commissioners
(Member Organizations)

Note: Text Only Example. This letter was sent to several member organizations.

April 10, 1997

As I am sure you are aware, the Commerce Committee is examining the question of whether or not the Congress should enact legislation concerning the electricity industry. This is a complex policy area, and it is important to have as full an understanding of the facts as possible before the Committee reaches any decisions.

In order to gain a better understanding of the relevant issues, I would appreciate your answers to the following questions. To ensure these are received on a timely basis, please provide your response by May 9, 1997. Please feel free to skip a question if you do not have enough information to answer it. Also, please feel free to send any additional comments you may have on these issues.

1. Has your Commission or State legislature considered or adopted retail competition? If retail competition is occurring at this point, what effect has it had on consumer prices?
2. Has your State asked Congress to enact legislation mandating retail competition? Has it sought Congressional action to enable or assist it in adopting retail competition? Has it requested or recommended any other type of Congressional action?
3. Does your Commission currently have sufficient authority to resolve stranded cost issues in the event Congress enacts legislation providing for retail competition by a date certain? If not, what timing and other problems might ensue? What could Congress do to address any such problems?
4. Are there any other areas in which your State currently does not have the necessary authority to address issues arising from federal legislation mandating competition, or repeal of the Public Utility Holding Company Act of 1935 (PUHCA) or the Public Utility Regulatory Policies Act of 1978?
5. Would any constitutional issues be raised by federal legislation:

   a. mandating that states choose between adopting retail competition by a date certain and having a federal agency preemptively impose retail competition?

   b. requiring states to conduct a proceeding on retail competition, reserving to the states discretion not to adopt retail competition if they determine doing so would not be in its consumers' best interests?

6. From a practical standpoint, what problems would arise if Congress adopted legislation mandating retail competition which did not grandfather prior state action?
7. In hearings before the Energy and Power Subcommittee during the last Congress, some witnesses took the position that Congressional legislation mandating retail competition is necessary to protect the interests of small and residential consumers. This was based on the assertion that large industrial customers are able to negotiate lower rates with state utility commissions, and that the incidence of such rate reductions is on the increase.

   a. Are you aware of any study or analysis relevant to your State that supports this conclusion?

   b. Please provide any information you can on the historical relationship between residential and industrial rates, the extent to which one customer class has subsidized another, and whether or not this trend has altered in recent years.

8. Although electricity rates vary widely within the U.S., they have fallen recently in some parts of the country. Please provide any information you can about rate trends in your State, and how they affect various customer classes.
9. Some proponents of retail competition hold the view that all electricity resources should be sold at a market price and that state authority to regulate retail rates should be eliminated. How would such a policy affect shareholders and ratepayers? What mechanisms could states or Congress employ to manage these issues? In a restructured electric industry, who should receive the benefits of these low-cost resources -- utility ratepayers, utility shareholders or the highest bidder?
10. Of those states which have adopted retail competition, how many have addressed the issue of "reciprocity", (that is, whether or not the state can bar sellers located in states which have not adopted retail competition from access to its retail markets)? Whose interests does a reciprocity requirement affect? Is a reciprocity requirement the only way to protect those interests, or are there alternatives? Would such a requirement raise constitutional issues?
11. If Congress were to require "unbundling" of local distribution company services as part of a retail competition mandate, what practical problems might this present to state regulators?
12. Does your Commission face particular problems in connection with public power or federal power in an increasingly competitive electricity market?
13. How would federal legislation mandating competition by a near term date certain affect funding needs for your Commission? If additional funding were needed, would it be available, and what problems might arise if it were not?
14. Has your Commission considered or adopted securitization plans as a means of providing for recovery of utility stranded assets? What risks are inherent in this approach, and who bears them?
15. There is a wide divergence of opinion as to whether or not PUHCA should be modified or repealed. Given the record level of merger activity, this question may become significant for all state regulators, whether or not they currently have regulatory responsibilities relating to registered holding company activities.

    a. Do you believe PUHCA impedes competition, at the wholesale or retail level? Can "effective competition" be achieved regardless of whether Congress enacts changes to PUHCA?

    b. Do you believe Congress should modify or repeal PUHCA? If so, why, and under what if any conditions?

    c. Should Congress enact legislation to modify the holding in Ohio Power Co. V. FERC, 954 F.2d 779 (D.C.Cir. 1992)?

I realize preparing a response to these questions will take time and effort on your part. I appreciate any help you can provide in furthering my understanding of the important issues involved in the ongoing debate on restructuring the electric power industry. Should you have any questions, please contact Sue Sheridan, Minority Counsel, at (202) 226-3400. Your response should be sent to:

The Honorable John D. Dingell, Ranking Member
Commerce Committee Democratic Office
564 Ford House Office Building
U.S. House of Representatives
Washington, D.C. 20515

With every good wish.

Sincerely,

JOHN D. DINGELL
RANKING MEMBER