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NATIONAL ASSOCIATION OF STATE UTILITY CONSUMER ADVOCATES
R E S O L U T I O N
Urging the Congress and Federal Agencies to Address Market Power
as a Component of Any Federal Restructuring Action
WHEREAS, Congress and the FERC are reviewing existing laws and rules
governing the structure of the electric utility industry; and
WHEREAS, the FERC has issued a Notice Of Inquiry into the types
of market and consumer protections that are necessary with respect
to mergers in light of the trend toward competition in the electric
utility industry; and
WHEREAS, the Congress enacted the Public Utility Holding Company
Act (PUHCA) in order to reduce and constrain the exercise of market
power in the investor-owned electric and natural gas utility industries
as well as to prevent abusive stock and business practices of far
flung investor-owned electric and gas utility holding companies;
and
WHEREAS, in the electric utility as well as other industries, mergers,
barriers to entry, abusive self-dealing, and cross subsidies can
be used to stifle competition; and
WHEREAS, an efficient and competitive electric industry will not
develop if the market consolidates to a handful of large entities
or if certain participants with market power are allowed to engage
in unduly discriminatory actions; and
WHEREAS, undue dominance by an entity in any geographic or product
market will frustrate and eventually eliminate effective competition,
requiring corrective action; and
WHEREAS, the mitigation or elimination of market power through
PUHCA's protections or other statutory and regulatory means is necessary
to ensure competitive outcomes that are consistent with the public
interest; and
WHEREAS, specific merger standards are needed which would enable
the FERC (and others) to distinguish efficient from inefficient
mergers, and pro-competitive from anticompetitive mergers; and
WHEREAS, the goal of restructuring should be to send sufficiently
clear and rational signals to the market so that the behavior of
participants will be consistent with the public interest.
THEREFORE, BE IT RESOLVED that the National Association of State
Utility Consumer Advocates (NASUCA) urges Congress and federal agencies
to adopt specific measures to protect consumers from market power
abuses; and
BE IT FURTHER RESOLVED that in considering action affecting regulation
or the structure of the electric industry, including PUHCA repeal
or reform, Congress should require federal regulatory agencies to:
1) prevent abusive or preferential affiliate transactions, 2) continue
oversight and protection over corporate and market structure to
prevent abuses to consumers and competition, 3) disallow costs which
are not prudent and reasonable from wholesale rates, 4) exercise
sufficient regulatory authority to prevent ratepayers from bearing
any risk of utility diversification and to prohibit cross-subsidies
between regulated and nonregulated subsidiaries; and
BE IT FURTHER RESOLVED that NASUCA urges the FERC to reject or
condition, as appropriate, any merger that creates or exacerbates
market power in the relevant geographic and product markets and
reject mergers whose anticipated consumer benefits can be achieved
through other means; and
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 membership of any proposed action prior to taking such
action if possible. In any event, the Executive Committee shall
notify the membership of any action taken pursuant to this resolution.
Approved by NASUCA:
June 26, 1996
Date
Chicago, Illinois
Place
Submitted by: NASUCA Electricity Committee
Frederick J. Schmidt (NV), Chair
Rajnish Barua (DE)
Paul Buckley (MD)
Barry Cohen (OH)
Nancy Vaughn Coombs (SC)
Steven Corneli (MN)
George Dean (MA)
Margaret Force (NC)
Larry Frimerman (OH)
Robert Kelter (IL)
Eugene Koss (CT)
James Lewis (CO)
Lewis Mills (MO)
Thomas B. Nicholson (IN)
Mark Payne (NC)
Blossom Peretz (NJ)
William Perkins (ME)
Edward L. Petrini (VA)
Irwin A. Popowsky (PA)
Kenneth Traum (NH)
Donald Trotter (WA)
National Association of State Utility Consumer Advocates
8380 Colesville Road, Suite 101, Silver Spring, MD 20910
Phone: (301) 589-6313 Fax: 589-6380
e-mail: nasuca@nasuca.org |