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News Release
February 6, 2002
CONTACT: David Fish
(202) 289-8928

Faulty Enron Electricity Policy Thrives at FERC
Experts Assess Deregulation in the Wake of Enron Collapse

WASHINGTON, D.C. - What do Enron and the Federal Energy Regulatory Commission have in common? Both talk about deregulation but promote policies that would increase regulations at the expense of consumers. That is the view of Progress & Freedom Foundation President Jeffrey Eisenach and Vice President for Research Thomas M. Lenard, who hosted a seminar at the National Press Club on Wednesday, “Deregulation After Enron.” Joining them were Vernon Smith of George Mason University and Jerry Taylor of the Cato Institute. A new study by Lenard, “RTOs, Market Power and the New Regulatory Agenda at the FERC,” was released.

“Enron may be on the way out, but some of its policy ideas are alive and well in Washington,” Eisenach said. “On balance, Enron was not a force for real deregulation; it advocated a special brand of re-regulation to serve its own particular interests.”

“Enron has been a strong proponent of requiring transmission owners to place their systems under the control of Regional Transmission Organizations (RTOs),” Lenard said. “That was the number one item on the wish list Enron CEO Ken Lay presented to Vice President Dick Cheney last April. What Enron wanted – being a marketer of electric power – was cheap transportation that would lower its costs and expand the scope of its market. In effect, Enron favored a quasi-nationalization of the transmission grid, along the lines of the interstate highway system.”

According to Eisenach and Lenard, the FERC continues to advance Enron’s RTO policy at a feverish pace, without sufficient analysis of future benefits. In his study, Lenard acknowledges the need to regulate transmission, but criticizes the FERC wholesale regulation policy for ignoring progress made under current laws, drying up private investment and being “fundamentally flawed”.

“The current direction of FERC is antithetical to the goal of a competitive electricity market,” Lenard wrote. “If the agency won’t reverse course on its own, the Congress should step in and curtail its authority.”

The Progress & Freedom Foundation is a market-oriented think tank that studies the digital revolution and its implications for public policy. It is a 501(c)(3) research & educational organization.



The Progress & Freedom Foundation