|PULLING THE PLUG ON MONOPOLIES?|
Local Utility Deregulation
June 3, 1997
in this forum:
How will deregulation lower costs? How will the deregulation affect state-run electric companies? Will deregulation force local companies to compete against corporate giants? Will deregulation end energy conservation? Who will pay the stranded costs? Will the U.S. gov't use its leverage as a consumer? Additional Comments
The Republican House Commerce Committee's guide to Utility Deregulation.
Representative Dan Schaefer's Homepage.
Representative John Dingell's Homepage.
Resources for the Future question the impact of electricity deregulation.
General information, schedules and past Freshmen Forums.
Return to @the Capitol.
Scrutinize the work of several major Congressional committees in online forums with the chairs and ranking members.
Follow the first year in Congress of Freshmen Reps. Kay Granger (R-TX) and Jay Johnson (D-WI)
A question from Joe Rogerson of Katy, TX:
Thinking beyond the next election... beyond even 50 years from now, what kind of effects are desirable? Most of the considerations I've seen, relate to short term benefits and short term disparities. What about the real effects?
What will be the effect on utility costs as non-renewable fuels are depleted?
Rep. Dingell responds:
While I'm not sure I can make any accurate predictions about conditions decades from now, much of the thinking in this electricity debate does appear to be short-term. For example, there seems to be a real disconnect between the willingness of many pro-retail competition theorists to sacrifice nuclear power plants that currently operate at rates above the national median without taking into consideration the fact that these plants offer substantial environmental benefits. This is particularly ironic in light of the EPA's interest in ratcheting up Clean Air Act standards. If the costs of Clean Air compliance rise, some of these nuclear plants may soon look more "competitive" than they do in the snap-shot taken today.
I do have some concern that today's blessings of cheap natural gas, coal and oil will not continue indefinitely. This again bears on the nuclear question. While there is hope for "renewable" fuels such as solar and wind energy, the degree to which they can be expected to become large-scale substitutes for fossil fuels is unclear. The lessons of the past suggest that we need a diversified energy portfolio to protect ourselves. It's a mistake to characterize electricity or any other component of our energy supplies as "just another commodity" as so many advocates of competition do.
Rep. Schaefer responds:
Perhaps the best evidence of the long-term benefits of bringing competition to the electricity industry comes from other industries that have been opened to competition. A recent study by scholars at the Brookings Institution and the George Mason Center for Market Processes is particularly interesting on this point. It examined five industries that have expanded competition over the past few decades: trucking, railroads, telecommunications, airlines and natural gas. Four consistent long-term trends emerged.
First, giving consumers choices lowered prices. Second, the savings to consumers were real and not simply the result of cost shifting among consumer classes. True innovation and increased efficiency spurred these savings. Third, reliability of the systems improved under competition. Finally, going only part of the way to competition did not generate nearly the same benefits as did giving all consumers full access to the marketplace. I believe that these four facts are equally applicable to full retail competition in the electricity industry.
Another study found that bringing competition to the electricity industry will result in an increase of the nation's gross domestic product by nearly $200 billion each year. This boost for the economy will certainly help the long-term financial prospects for American companies paying lower electricity bills, will also increase the competitiveness of U.S. products as world markets continue to grow into the next century providing long-term job security for our workers.