For Immediate Release:


Alternating Policy Currents in the Senate

(WASHINGTON, D.C., March 5, 2002) - The federal government must take a lead role in ensuring electricity markets are truly competitive, efficient, reliable, and protective of both the consumer and the environment, say leading electricity policy scholars Dallas Burtraw and Karen Palmer.

Burtraw and Palmer, senior fellows at the independent environment and energy research institute Resources for the Future (RFF), say deregulation by itself does not ensure a competitive market, fair pricing, or reliability of supply. "Competition does not thrive in the absence of regulation; ripping away regulatory institutions leaves a vacuum, which leads to havoc not competition," says Burtraw.

"That's why the federal government has a key role to play developing and building regulatory and marketplace structures to ensure that there are no gaps in transmission, as well as real-time pricing so consumers are no longer at the mercy of wholesale power marketers and can respond to - and prevent - price spikes," says Burtraw.

But it's also crucial, say the RFF scholars, not to forget about the environment in the energy policy mix: "If we're successful in accelerating the move towards competition it will also mean an increase in emissions, which is why any energy policy must have a link to environmental policy, including market-based emissions caps."

Palmer, co-author of the just-released Alternating Currents: Electricity Markets and Public Policy, points to what she calls the "policy disconnect." Currently, states have the sole authority to site new electricity transmission lines, but transmission grids and wholesale electricity markets are regional and inter-state by nature. "Additional transmission capacity can be an important ingredient to realizing the full benefits of competitive electricity markets. And that's why the federal government — or at the very least inter-state regional authorities — should be given the power to oversee the siting of new transmission lines," she says.

Palmer also says separating transmission from generation is crucial if competitive electricity markets are to work well for everyone in the market — consumers and industry. "If the transmission operator owns a generator company, then there is a potential conflict of interest. The transmitter may be more interested in boosting profits of the generator it owns than in facilitating a well-functioning market, and that's not good policy."

As the U.S. Senate begins its debate on the energy bill, RFF scholars can offer expert analysis of all aspects of Senate energy policy debate — from fuel economy standards, renewable energy, and proposed tax breaks for energy efficiency and conservation, to drilling in the Arctic National Wildlife Refuge (ANWR), oil security, and the Bush administration climate change proposals. In specific, Howard Gruenspecht (CAFE, oil security, electricity, renewables), Mike Toman (ANWR, oil security), and Joel Darmstadter (renewables, conservation, energy security).


Contact:
Dallas Burtraw, RFF Senior Fellow, (202) 328-5087, burtraw@rff.org.
Karen Palmer, RFF Resident Scholar, (202) 328-5106, palmer@rff.org.
Howard Gruenspecht, RFF Resident Scholar, (202) 328-5026, gruenspecht@rff.org.
Mike Toman, RFF Senior Fellow, (202) 328-5091, toman@rff.org.
Joel Darmstadter, RFF Senior Fellow, (202) 328-5050, mailto:darmstadter@rff.org
Jonathan Halperin, Director, Communications Planning & Strategy, 
(202) 328-5030, halperin@rff.org.