A question from Mark Daly of Omaha, NE:
We have seen no discussion in the press with respect to the probable impact of the legislation under consideration in those locations, such as Nebraska, which rely on public
power systems, rather than local private monopolies. In Nebraska, we are proud of our unique system, which seems to work quite well at a reasonable cost. Are there any studies which support a change? If there are, by whom were they prepared, those with a vested interest in privatization and deregulation? What do the studies by consumer oriented organizations suggest?
It does seem that the rush to privatization ought to take in to consideration more than the drive for profits which seems to dictate so much of our government policy today. I trust
that will be the case in further consideration of the current proposal.Thank you very much for all of your hard work on this issue.
Rep. Dingell responds:
I'm keenly aware of the wide variety and diversity in the electric systems of the States. Nebraska is unique in that it relies 100 percent on cooperatives. Tennessee is unique in that nearly all of its retail sales occur in the absence of state regulation, because the Tennessee Valley Authority serves the vast majority of the state's ratepayers.
In fact, the need to better understand these state and regional differences is one of the reasons I sent more than a hundred letters earlier this year to state regulators, utilities, and consumer advocates. In those letters, I asked the same question about the analytical work in support of extravagant claims about the benefits of deregulation. We are still analyzing the responses, but to date I have not heard of any credible studies in support of these predictions, though two studies address the subject in broad and largely theoretical terms. Neither of these is very impressive, and your question about the interests of the folks who prepared these studies is right on point. An author of one pro-competition study, which has been presented at Congressional hearings, turns out to be an investor in a start-up electric enterprise now under under investigation by South Carolina utility regulators.
On the other hand, there are studies -- like a policy paper by the Competition Policy Institute in April -- that conclude that competition can be good for consumers, but only if states are permitted to retain control over whether, when and how to adopt retail competition. I lean heavily toward this point of view, since states are deeply engaged in the competition issue and generally seem capable of handling it without Congressional direction.
Rep. Schaefer responds:
It does seem that the rush to privatization ought to take in to
consideration more than the drive for profits which seems to dictate so
much of our government policy today. I trust
that will be the case in further consideration of the current
proposal.Thank you very much for all of your hard work on this issue.
I believe that public power should be able to compete with investor-owned
utilities in providing electric services to consumers. Many public power
systems have existed for 100 years, and deliver electricity at low cost to
their consumers. However, some public power systems charge high rates, and
their consumers would benefit from choosing another electric supplier.
For example, residential consumers in Omaha pay 6.68 cents per kilowatthour.
That is higher than the state average of 6.37 cents, and more than twice as
high as the rate paid by consumers in Spalding, Nebraska.
Just because the rates charged by public power systems do not include profits
does not mean they are low. Citizens in Decatur, Nebraska, which has a
public power system, pay 11.85 cents per kilowatt-hour -- as much as people
in Chicago, Illinois pay and nearly as much as people in New York City. Some
public power systems deliver electricity efficiently, others do not.
Consumers of public power systems such as Decatur should be able to choose
lower cost suppliers. Choice will force all suppliers -- including power
systems -- to cut unnecessary costs. Consumers will get lower rates as a
It is important to note that the legislation I have introduced empowers
states, municipal utiltities and rural cooperatives with the tools they need
to move forward with their own restructuring plan with a deadline of giving
all consumers choice by December 15, 2000. States, including municipalities
and rural coops are given almost complete freedom, with only minimum federal
standards, to set the terms and conditions for unbundling, universal service,
reliability, stranded costs, energy efficiency, conservation and
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