Letter to the National Association of State Utility Consumer
Advocates (Member Organizations)
Note: Text Only Example. This letter was sent
to several 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.
- How has the increased competition in wholesale electric markets affected consumers in
your State to date?
- What role has your office played in any state proceedings on retail competition? What
position has your office taken on the issue of whether or not retail competition would
benefit consumers and on the issue of whether or not federal legislation mandating
adoption of retail competition by a date certain, or any other type of federal
legislation, is needed? Do you believe there are substantial differences among the various
states' consumer advocates, and why or why not?
- Some proponents of federal legislation mandating that states adopt retail competition by
a date certain argue that substantial numbers of large industrial customers recently have
negotiated favorable rates with their public utility commissions. Such proponents have
further argued that residential and small commercial consumers lack bargaining power to
achieve similar rate reductions. Finally, these proponents argue that federal legislation
is essential to ensure that smaller consumers are not economically disadvantaged relative
to large industrial customers.
a. Please indicate whether or not you agree with the three premises outlined above.
b. In particular, please indicate whether you have reason to believe that large
industrial customers are being favored in rate negotiations before public utility
commissions relative to smaller commercial and residential customers. What type of state
statutory direction generally governs such rate determinations? Historically, how have
states balanced the interests of different customer classes? Is this changing?
c. What position has your office taken in recent rate proceedings concerning large
industrial customers' requests for rate reductions?
d. In general, have consumer electricity prices in your State been rising, holding
steady, or falling, and why?
- What are the most difficult issues to resolve in connection with utilities' stranded
costs? To the extent your State has adopted, or is considering adopting, retail
competition, has there been an attempt to distinguish between costs which were prudently
incurred and those which were not? If Congress were to enact legislation mandating that
states adopt retail competition by a date certain, what, if any, provisions relating to
stranded costs should be included? Is securitization a useful tool, and how would it
affect different interests?
- Some proponents of retail competition hold the view that all electricity resources
should be sold at market prices and that state authority to regulate retail rates should
be eliminated. Could such a policy result in rate increases for customers that currently
receive the benefit of such low-cost resources? In a restructured electric utility
industry, who should receive the benefits of these low-cost resources -- utility
ratepayers, utility shareholders, or simply the highest bidder?
- Recently there has been increased discussion of the need for Congress to enact
"reciprocity" requirements barring retail sales of power by parties located in
states which have not adopted retail competition to parties in states which have adopted
retail competition.
a. Do you have a position on this issue?
b. Which interests would benefit from a federal reciprocity requirement, which would
not, and why?
- Does your State currently have adequate tools to protect the interests of low-income
electricity consumers if Congress were to mandate retail competition by a date certain? If
such legislation were enacted, do you have any recommendations as to how Congress should
approach this important issue?
- Do you have any concerns about reliability of service or the ability of the interstate
transmission or local distribution systems to handle the transactions that would occur if
retail competition became more prevalent?
- Are rural and urban consumers in different positions with respect to their relative
ability to bargain for competitive electricity prices? Are all consumers similarly
situated in terms of aggregation?
- Some proponents of retail competition have argued in favor of federal legislation
requiring states to adopt retail competition regimes which include mandatory unbundling of
those services currently provided by local distribution companies. What advantages and
disadvantages might this pose for consumers? Do you have any recommendations?
- There is a wide divergence of opinion as to whether or not the Public Utility Holding
Company Act of 1935 (PUHCA) should be modified or repealed. In view of the recent merger
trend, PUHCA's protections have significance for all states, whether or not they
traditionally have been served by a registered holding company.
a. Do you believe PUHCA is a significant impediment to competition, at the wholesale or
retail level, or can "effective competition" be achieved regardless of whether
Congress enacts changes to PUHCA?
b. Do you believe Congress should modify or repeal PUHCA, why, and under what, if any,
conditions?
c. Should Congress enact legislation to modify the holding in Ohio Power 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, and I appreciate your help in providing information to further 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
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