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NEWS RELEASE
March 27, 2003
CONTACT: David Fish
(202) 289-8928
   

Ex-Regulator Cites
Electric Accountability Problems

Gifford Questions Regional Commissions, Standard Market Design

WASHINGTON, D.C. - The immediate past chairman of the Colorado Public Utilities Commission and current Washington think tank president, Raymond L. Gifford, today urged members of the Senate Committee on Energy and Natural Resources to be wary of potential “accountability problems” associated with that panel’s nascent Regional Energy Service Commission proposal and the Federal Energy Regulatory Commission’s plan for Standard Market Design.

In testimony before the Committee today, Gifford, who is president of The Progress & Freedom Foundation, a market-oriented think tank, said the RESC is “a perfectly sound theoretical idea” that, in execution, would likely result in another layer of regulation. “Flying below the federal radar, but above state accountability…[it] will become a prime target of regulatory opportunism,” he said. If members consider creating such a body, Gifford maintained “the jurisdictions of both FERC and the state commissions must be pared back to make the RESC the sole, preeminent regulatory body for electricity, and that body must bring within its scope all players, public and private. That is the only way to have a coherent and fair regulatory scheme.”

Calling the FERC’s SMD proposal “the elephant in the room” at today’s hearing on the electricity title, Gifford suggested senators should either “block it” or “mandate a dramatic change of course.” The Committee’s focus should be to “minimize the effects of a potential grand, national regulatory mistake, and shrink the space for opportunism to pervert outcomes.” The former regulator maintained that splitting operation from control and creating a “barely accountable entity,” the Independent Transmission Provider, would result in “accountability problems similar to the RESC.” Moreover, he warned that long-term investment decisions would be “thrown into what will become a hyper-political planning process.” Finally, Gifford said SMD would create “a regulatory vision of the national grid that will lock-in the current paradigm of electricity generation, transmission and distribution for years to come.”

Gifford also made the case for the elimination of ‘Section 203’, FERC merger review authority, as well as both the Public Utility Holding Company Act and the Public Utility Regulatory Policy Act. The former, he said, is a “duplicative and costly layer of regulatory review” that affects a transfer of wealth from consumers to law firms. The latter two “stifle innovation, misallocate investment and mandate regulatory solutions that harm consumers.” The Progress & Freedom Foundation is a market-oriented think tank that studies the impact of the digital revolution and its implications for public policy.

The Progress & Freedom Foundation is a market-oriented think tank that studies the impact of the digital revolution and its implications for public policy. The Foundation is a 501(c)(3) nonprofit organization founded in 1993.

 

 

The Progress & Freedom Foundation