National Association of State Utility Advocates

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National Association of State Utility Consumer Advocates

R E S O L U T I O N

Urging Federal and State Policymakers to Protect
the Interests of Consumers in Setting Policies to Create the
Market Structure for Competitive Utility Services
WHEREAS, policymakers are being called upon to establish and implement policies to facilitate the creation of a competitive market for certain gas, electric and telecommunications services previously provided to all consumers by highly regulated utility companies;

WHEREAS, proper policies are necessary if consumers are to benefit from the establishment of a competitive marketplace for services previously provided by regulated monopolies;

WHEREAS, a sufficient number of competitors is essential for all consumers, especially small consumers, to have meaningful choices in the successful transition to competition in gas, electric and local telecommunications markets;

WHEREAS, the transition from regulated markets to competitive markets requires that currently regulated services be unbundled into their components which will reflect both regulated and competitive services;

WHEREAS, effective competition and the protection of consumers depends on the elimination of market abuses;

WHEREAS, the introduction of competition into these markets which are already highly concentrated will require active monitoring by state and federal regulators and other antitrust enforcement authorities;

WHEREAS, the integration of companies providing both regulated and unregulated energy and communications services may lead to discrimination in access to monopoly facilities and information; other actions by firms to raise costs and reduce the availability of inputs used by non-affiliated competitors; improper information sharing; cross-subsidization and self dealing;

WHEREAS, the creation of a competitive electric generation market requires that the interconnection costs of new generating units be fairly allocated in a competitively neutral manner between generation owners and the users of the transmission grid;

WHEREAS, the individual characteristics of these markets present potential anti-competitive problems in transitioning from regulated to competitive markets;

WHEREAS, measures established and adopted by policymakers for stranded cost recovery may be barriers to entry; and

WHEREAS, an efficient and competitive market for unregulated utility services may not fully develop for all customers or may develop only after a lengthy transition period.

THEREFORE BE IT RESOLVED, that NASUCA calls upon state policymakers in states that have not adequately addressed these matters, and federal policymakers, if they adopt restructuring legislation or regulations, to address horizontal and vertical market power issues by, at a minimum:

1. giving regulators specific and sufficient authority to monitor competitive markets and to remedy anti-competitive conduct or the abuse of market power by incumbents, successors and new entrants, including the authority to require divestiture, or other structural remedies, and behavioral remedies;
2. strengthening the antitrust laws, if necessary, and clarifying the application of antitrust laws to products and services once provided by regulated utilities;
3. providing for the use of anti-trust analysis and market simulation modeling in the assessment of horizontal market power;
4. assuring there is adequate regulatory protection for all consumers against anticompetitive conduct before the removal or lessening of regulation;
5. preventing incumbent monopolists from using the power of incumbency to erect barriers to the entry of competitors;
6. preventing the providers of regulated monopoly services from coercing their customers to purchase non-regulated services from their affiliates;
7. conditioning, where applicable, any permitted recovery of electric stranded costs on methodologies, such a market test evaluation of assets, that prevent utility overcollection, provide verifiable results, and reduce consumer costs;
8. requiring full mitigation and netting of stranded costs which are determined to be recoverable and requiring that such costs, where appropriate, be shared with shareholders;
9. preventing cost shifting in the unbundling of rates and services and assuring that unbundled costs are properly allocated based on function;
10. requiring competitively neutral access to monopoly facilities and information;
11. requiring, in the case of electric restructuring, a structure which assures the fair, independent and disinterested operation of the transmission system;
12. facilitating the aggregation of small customers and prohibiting discrimination against the aggregation of small customers; and
13. requiring the provision of energy supply service at a fair, reasonable and affordable price for customers who do not wish to choose a provider or who are not offered service by suppliers in the competitive market.
BE IT FURTHER RESOLVED, that NASUCA calls upon federal and state regulators to protect consumers, particularly small consumers, from market power abuse; abusive affiliate transactions; cross-subsidies; illegal tying arrangements; discrimination and other anti-competitive behavior in the unregulated markets for formerly regulated utility service; to monitor the markets for such practices; to require unbundling of rates and services in a manner which prevents cost shifting and improper cost allocation; to facilitate the aggregation of small customers; and to require that default service be made available for customers who do not choose a provider or who are not offered service by suppliers in the competitive market at fair, reasonable, and affordable prices.

BE IT FURTHER RESOLVED, that NASUCA calls upon federal and state anti-trust authorities to vigorously enforce the antitrust laws.

BE IT FURTHER RESOLVED, that NASUCA authorizes its Executive Committee to develop specific positions and to take appropriate actions consistent with the terms of this resolution. The Executive Committee shall advise the members of any proposed action prior to taking action if possible. In any event, the Executive Committee shall notify the membership of any action taken pursuant to this resolution.

Approved by NASUCA:
Submitted by:

Orlando, Florida
Place
NASUCA Consumer Protection Committee

November 11, 1998