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May 20, 2002
CONTACT: David Fish
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Senate Electricity Bill is Step Backwards
Lenard Dubs Legislation "Regulatory Wolf in Free Market Clothing

WASHINGTON, D.C. - Tucked inside the recently passed Senate energy bill is the first major piece of electricity legislation in a decade. Unfortunately, according to Progress & Freedom Foundation Vice President for Research Thomas M. Lenard, it fails to provide a deregulatory impetus. In fact, with the exception of relatively minor reforms, the bill represents “a step backwards” Lenard writes in a new report, “The Senate’s Electricity Bill: A Regulatory Wolf in Free Market Clothing.”

“The Senate bill increases rather than reduces the role of government in the electricity marketplace,” Lenard writes. “Overall, the bill increases regulatory uncertainty and does not provide the incentive structure needed to maintain and expand the nation’s critical electricity infrastructure” and “will make it more difficult to provide reliable, low-cost electricity to consumers.”

Using the 12-point checklist for electricity deregulation PFF published three years ago, Lenard analyzes the Senate measure to see whether it reduces federal interference in the electricity marketplace. On only two of the twelve points does the new legislation deregulate electricity policy (by repealing the Public Utility Holding Company Act and managing not to create new barriers on the ability of utilities to offer new services and products). Otherwise, its electricity provisions “hinder rather than promote competition.”

Of particular concern to Lenard are merger and market-based pricing provisions, “each of which provide FERC the ability to impose new conditions on the market and increase regulatory uncertainty,” and the renewable fuels portfolio standard and other fuel-use provisions “that will distort the market and raise electricity costs for consumers.” He believes what is needed is legislation that removes impediments to competition, reduces regulatory uncertainty and provides better incentives to invest in infrastructure. “The goal of deregulation is reliable, low cost electricity,” he writes. “The Senate bill moves in the opposite direction.”

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