WASHINGTON, D.C., Oct. 6, 1999 - The American Public Power Association cannot support the Electricity Competition & Reliability Act (H.R. 2944) in its present form because it will not promote competition for the benefit of all electricity consumers, Alan H. Richardson, APPA executive director, today told the Energy and Power Subcommittee during a hearing on the bill.

"The abuse of existing market power, aggravated by the accumulation of ever increasing control over transmission and generation in the hands of an ever decreasing number of players is the single biggest obstacle to the realization of this objective and the creation of robust competition in the electric utility industry," Richardson said.

He faulted numerous provisions in H.R. 2944 for their lack of consumer protections, and said APPA is extremely concerned about the entire institutional framework that is evolving for the industry largely unchecked by either the Federal Energy Regulatory Commission or the states.

"Expanded regulation in some areas is in fact a prerequisite to expanded competition in others," Richardson said. "That expanded regulation in some areas is not only compatible with but essential for competition in others is obvious from a review of the transmission access provisions of the Energy Policy Act of 1992 [when regulation of transmission was expanded in order to permit deregulation of generation]… we hope Congress demonstrates the same wisdom today, and takes the steps necessary to ensure that the promise of competition it held out in 1992 becomes a reality as we move into the next millennium."

Public power supports the enactment of comprehensive federal legislation that facilitates state electric utility restructuring initiatives, clarifies state and federal areas of jurisdiction, and removes interstate commerce and federal tax barriers to competition, Richardson stated. He listed the essential elements that should be included in federal legislation:

• provisions that clarify federal laws to ensure that FERC has jurisdiction to enforce comparability in transmission services on facilities that are part of the national grid;
• provisions that broaden the criteria used by FERC in the review of a variety of proposed mergers and sales of generation assets, and enable the Commission to address market power problems by means up to and including asset divestiture;
• provisions that expand FERC authority with respect to the creation of regional transmission organizations that are truly independent and broad enough in scope and configuration to promote efficient and non-discriminatory power markets while taking into account the unique characteristics of community- and state-owned public power systems; and
• provisions that address tax transition problems arising because the U.S. Tax Code is out of sync with state restructuring legislation.

Richardson said that while H.R. 2944 includes the foundation for the resolution of public power's "private use" problem, it falls short on all other prerequisites for APPA support. Richardson said he hopes Congress will continue to work to enact legislation that promotes competition and ensures its benefits - lower rates and better service - for all electricity consumers.