Urging Congress and the States to Support Pro-consumer
Competitive Principles for the Electric Industry and to Reject Proposals
That Will Harm Consumers and Impede Effective Competition
WHEREAS, many issues surrounding electric utility restructuring are currently under active consideration by Congress, the Federal Energy Regulatory Commission, and state legislators and regulators throughout the Nation; and

WHEREAS, these issues include, but are not limited to, the establishment of retail consumer access to a competitive generation market; the recovery by high-cost utilities of uneconomic costs which would be “stranded” in a competitive generation market; the protection of customers who are currently served by low-cost electric utilities; the preservation of programs designed to protect low-income consumers; the potential for cost shifting onto customers who lack competitive generation alternatives; the prevention or mitigation of market power through statutory and regulatory means; the repeal or reform of existing federal laws, including the Public Utility Holding Company Act of 1935 (PUHCA) and the Public Utilities Regulatory Policies Act of 1978 (PURPA); and the jurisdictional boundaries of state and federal authorities with respect to electric restructuring issues; and

WHEREAS, the resolution of each of these issues could have a profound effect on the future of the electric industry and upon all electric consumers; and

WHEREAS, the construction and operation of power plants need not be monopoly functions, and the National Association of State Utility Consumer Advocates (NASUCA) supports efforts to maximize rate reductions to consumers due to competitive procurement of electric generation and to minimize any negative impacts of a transition to such competitive procurement; and

WHEREAS, certain electric utility functions, such as electric distribution and transmission, remain natural monopolies and should be subject to continued regulation that requires utilities to charge no more than a just and reasonable rate for such service; and

WHEREAS, NASUCA opposes efforts to deregulate services that are not subject to full and fair competition; and

WHEREAS, anti-competitive conduct can result from full or partial deregulation unless the necessary structures and conditions for effective competition exist or their absence can be remedied by government action; and

WHEREAS, efforts to bring about competition in the electric generation industry will be stifled if incumbent utilities or other power providers are able to exercise market power, for example, through control of substantial amounts of generation resources within a market or through discriminatory use of monopoly bottleneck resources; and

WHEREAS, it is premature and counter-productive to repeal or weaken the consumer and competitive protections provided by PUHCA unless and until sufficient consumer and competitive protections are in place elsewhere at the federal and state level; and

WHEREAS, it is premature and counter-productive to repeal the mandatory purchase obligation of PURPA until either market or regulatory protections are in place to prevent utilities from disregarding competitively priced non-utility resources; and

WHEREAS, if retail access to competitive generation is permitted, it must be implemented in such a way that all consumer classes benefit through lower rates; and

WHEREAS, NASUCA rejects the proposition that utilities are entitled to charge consumers for a full return on and recovery of uneconomic generation costs which may be stranded in a competitive market; and

WHEREAS, NASUCA continues to support the principle that utilities should not be permitted to charge ratepayers for the costs of investments that are not currently used and useful in serving those ratepayers; and

WHEREAS, NASUCA opposes efforts to shift uneconomic costs onto those customers who lack reasonably priced competitive alternatives, whether the cost shifting results from retail access or from discriminatory discounting of rates to certain customers at the expense of others; and

WHEREAS, to the extent certain utility system costs and other costs which produce societal benefits are charged to any consumers who are connected to an electric utility’s system, those costs must be charged to all consumers on a non-bypassable basis; and

WHEREAS, the goals of safety, reliability and environmental protection must be retained in any transition to a more competitive electric industry, and adequate, safe and reliable electric service must be made available to all consumers on a non-discriminatory basis at just and reasonable rates; and

WHEREAS, NASUCA opposes restructuring efforts that would jeopardize the continuation of programs designed to afford low-income customers safe and adequate electric service at affordable rates; and

WHEREAS, competition will only benefit consumers at the retail level if adequate information about the costs, risks, and benefits of customer choices are provided to consumers on a timely basis; and

WHEREAS, NASUCA opposes any effort by congress or the Federal Energy Regulatory Commission to preempt the authority of states and state public utility commissions to determine the appropriate recovery, if any, by utilities of uneconomic costs that are stranded as a result of retail access to competitive generation; and

WHEREAS, if federal policies are adopted to promote efficient regional planning, coordination and the competitively neutral use of transmission assets, the regulatory authority of the states over those activities must be maintained; and

WHEREAS, while NASUCA would not oppose Congressional efforts to make it permissible and feasible under federal law for those states that choose to do so to allow access to competitive generation at the retail level, NASUCA submits that Congress should not mandate such access and that the respective states must be permitted to determine the extent of and pace at which any such transition to retail generation competition should occur; and

THEREFORE, BE IT RESOLVED, that NASUCA urges Congress and the States to adopt policies which support pro-consumer competitive principles that benefit all electric utility consumers and reject proposals that will harm consumers and impede effective competition;

BE IT FURTHER RESOLVED, that NASUCA urges Congress and the States to adopt policies which are consistent with the principles set forth above; 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 action if possible. In any event, the Executive Committee shall notify the membership of any action pursuant to this resolution.

Approved by NASUCA:

Chicago, Illinois

June 26, 1996

Submitted by: NASUCA Electricity Committee

Committee Members:

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)