Agenda

Introduction

In its combined economic, equity, and environmental significance, the electric industry has few rivals. Congress is considering proposals that would fundamentally restructure the entire industry. Such proposals could compound existing problems and create new ones. Therefore, any such legislation must lead to a cleaner environment as well as lower electricity bills for all consumers. To ensure that electric industry restructuring yields real benefits to both consumers and the environment, we unite behind a common agenda.

1. Require all power generation to face full and fair competition.

   Specific safeguards are needed to ensure that restructuring is not frustrated by policies and actions that protect today's monopoly-owned generators from competitive challenge by cleaner, more efficient, and less costly alternatives.

   1. Secure prompt separation of competitive businesses, such as generation and certain retail services, from businesses with monopoly facilities in the same business, such as transmission and distribution companies. Solutions include removing legal barriers to separation; requiring separation as a condition for approving mergers or changes in price regulation; and acknowledging the authority of state legislators and federal, state, and local regulators to order divestiture under appropriate circumstances.
      
      
   2. In order to protect consumers and shareholders from potential abuses of holding companies, the provisions of the Public Utility Holding Company Act (PUHCA) and the Public Utility Regulatory Policy Act (PURPA) should remain in force, at least until federal and state regulators determine that full and fair competition has been established. Even after such determinations, market power and other protections must continue to protect consumers and shareholders.
      
      
   3. As a precondition for any deregulation of generation prices for any market or market segment, regulators must make affirmative findings that the market or market segment is actually competitive and that no power supplier has undue market power as a result of its control of either generation resources or a combination of generation, transmission, and distribution resources.
      
      
   4. Ensure that all generators have equal access to transmission systems and competitive markets, and that transmission pricing does not discriminate against intermittent and/or distributed resources such as wind, solar power, and energy efficiency.
      
      
   5. Prevent either federal or state regulations from subsidizing continued operation of any existing fossil-fueled or nuclear power plants (e.g., by providing guarantees of above-market payments for power generated at such plants). If any such power plant cannot sell power at competitive prices that include the on-going costs of safe operation, maintenance, capital investments, decommissioning and waste disposal, either the owner suffers the loss or the plant
      
      
   6. Prevent any generator from achieving a competitive advantage because of unequal or inadequate environmental standards. Total national and regional emissions from electric generators should be capped and reduced over time, and allocation of emission allowances should be based on eliminating unequal performance standards.
      
      
   7. Prevent the operators of federal and private hydroelectric facilities from gaining a competitive advantage in the marketplace by avoiding necessary fish and wildlife, recreational, and other environmental protection, mitigation, and enhancement measures.
      
      
   8. Expand and enforce anti-trust protections at the Federal Trade Commission and the Department of Justice, as well as state attorneys general and public utility commissions.
      
      
   9. Identify and eliminate federal tax and subsidy structures that favor polluting generating technologies, such as fossil-fired or nuclear power (examples include favorable tax treatment for fossil fuel extraction and existing limits on liability for catastrophic accidents at nuclear power plants). At the same time, incentives to develop and deploy clean power technologies should be maintained and expanded to compensate for continuing distortions in energy prices.
      
      

   
   

2. Ensure universal, reliable, and quality service through strong consumer rights and protections.

   Electricity is a necessity of modern life. Restructuring should go forward only if all consumers, including residential and small business customers, enjoy lower bills, high quality service, and strong consumer protections. Strong residential customer service safeguards and service quality standards must be maintained. Programs and mechanisms that enable residential consumers with low incomes to manage and afford essential electric service must be institutionalized as a part of any industry restructuring.

   1. Ensure that all consumers, large and small, rural and urban, low-income or otherwise, enjoy the benefits of industry restructuring, as well as high quality service. A high quality, common standard of service includes protections from service interruptions or voltage fluctuations as well as accurate, timely, accessible, and responsive customer service and information.
      
      
   2. Create minimum federal standards for support of affordable electricity and energy efficiency for low-income households. Establish a federal mechanism to fund such efforts (as well as programs for renewables and energy efficiency) by requiring a non-bypassable system benefits charge, representing a minimum of 4% of retail electricity revenues (based on 1996 revenues). Acknowledge state authority to increase investment above this minimum. Alternatively, achieve comparable results by using a federal, non-bypassable charge to match qualifying state-mandated investments and ensure minimum levels of performance. Design such mechanisms to ensure sustained improvements in efficiency and to achieve universal service. No funds collected through this charge shall be used to replace or reduce funding for existing federal programs or activities.
      
      
   3. For systems with retail competition, electricity service must be available to consumers who do not or cannot choose a supplier.
      
      
   4. All electricity customers must enjoy protections from fraudulent and abusive practices by suppliers. Credit and collection practices must be fair and reasonable. Consumers must have recourse, including regulatory enforcement and a private right of action, to obtain redress when these rights have been violated.
      
      
   5. Suppliers must be bonded and licensed, to ensure that they are qualified and capable of providing service consistent with the public interest.
      
      
   6. Some of the rights consumers must have include (1) the right to be free from disconnection when loss of service would be dangerous to the health of a household member, (2) the right to adequate notice of a suppliers' intention to cease supplying power and of the right to an alternative supply, (3) the right not to have electricity disconnected and to be denied service for failure to pay a particular competitive supplier, and (4) the right to accurate and timely metering and billing.
      
      
   7. Organizations operating transmission and distribution systems should have a firm mandate to preserve and enhance reliability. This mandate should be overseen and enforced by appropriate federal or state agencies.
      
      
   8. For systems with retail competition, facilitate aggregation for all residential and small business consumers, so that they can combine their market power. To this end, allow any municipality to become an aggregator on behalf of its citizens, so long as it meets environmental, non-discrimination, and universal service standards.
      
      

   
   

3. Expand the use of energy efficiency and renewable energy.

   Long-term investments in energy efficiency and renewable energy resources (excluding hydropower and power from non-organic solid waste incineration) yield significant non-market benefits to the environment, public health, national security, and the economy. Federal restructuring legislation should include affirmative measures to promote a transition to clean energy sources.

   1. Establish a nationwide "portfolio standard" to encourage diversity of renewable energy resources. The portfolio standard should be based on a system of tradable energy credits and include minimum requirements to ensure that total generation from these renewable sources equals at least 2.5% of all generation by 2000, 5% by 2005, and 10% by 2010. Federal legislation should promote aggregation in the renewable credit market of generation from small-scale installations, such as small wind and distributed photovoltaic systems. States should be authorized to set higher standards.
      
      
   2. Require states to allocate equitably among all electricity consumers a non-bypassable system benefits charge, representing a minimum of 4% of retail electricity revenues (based on 1996 revenues). Alternatively, achieve comparable results by using a federal, non-bypassable charge to match qualifying state-mandated investments and ensure minimum levels of performance. Acknowledge state authority--subject to minimum federal standards--both to increase investment above this minimum and to determine the appropriate allocation of funds between energy efficiency, renewable energy, and low-income programs, including programs designed to support distributed energy systems, research, new and emerging technology deployment, and low-income services. No funds collected through this charge shall be used to replace or reduce funding for existing federal programs or activities.
      
      
   3. Ensure that federal and state agencies (1) support the transformation of markets for energy-efficient goods and services so that over the long-term energy-saving practices become the norm without continued market intervention; (2) provide for the delivery of conservation services where market failures and/or barriers have been identified; (3) create incentives for displacing new distribution equipment with less costly energy efficiency improvements; (4) provide consumer education that supports efforts to deliver services and to transform energy efficiency markets, and (5) do not approve electric rate designs that use misleading price signals to promote consumption and undercut efficiency improvements.
      
      
   4. Ensure that revenues for transmission and distribution businesses are not tied to retail electricity sales volumes to avoid reinforcing barriers to energy efficiency, but such revenues shall be collected on a volumetric basis at least to the extent they are so collected under current regulation.
      
      
   5. Require states to provide net metering for small scale renewables with universal interconnection standards for safety and power quality (net metering allows consumers with grid-connected renewable energy systems to lower their electricity bills by the amount of power produced).
      
      
   6. Require all electricity generators, and aggregators of distributed or off-grid systems, to provide information to the Energy Information Administration on an annual basis about the mix and amount of their electricity production and any renewable energy credits that they produce or sell.
      
      
   7. Prohibit states from subsidizing conventional generating plants by their imposition of transition charges or other similar fees on renewable generation, or efficiency improvements.
      
      
   8. Honor existing PURPA contracts, even if PURPA is modified as part of restructuring legislation. Do not undermine renewable resource rights under existing contracts (PURPA or otherwise).
      
      
   9. Establish minimum efficiency standards for distribution transformers, ensuring that utilities do not opt for inefficient equipment with lower purchase prices but higher life-cycle costs.
      
      

   
   

4. Ensure fair allocation of the benefits and costs of electric restructuring.

   Poorly designed restructuring mechanisms could leave some consumers, particularly small users, worse off. The transition to a competitive market must reduce electricity bills for all consumers, including low income residential consumers. In addition, a majority of the signers believe that utilities should bear all losses associated with any uneconomic nuclear and fossil-fueled power plants. We all agree on the following "bottom lines" for addressing these issues:

   1. Do not create any federal rights to stranded cost recovery for utilities.
      
      
   2. Prohibit federal or state regulators from authorizing recovery of prospective above-market generating costs, such as future capital cost additions at nuclear and fossil-fueled power plants.
      
      
   3. Ensure that all electricity consumers receive the full net economic value of any inexpensive ("below market") generating resources that their utilities own at the time of restructuring.
      
      
   4. Use a speedy, open, and fair process to secure simultaneous access for all customer classes to any opportunities for retail competition.
      
      

   
   

5. Require that the restructuring of the electric power industry be designed to produce an industry that operates in a manner compatible with achieving national environmental and public health objectives.

   Current emissions from electric generators are preventing achievement of important regional and global environmental and public health objectives. Increased access for generators to electricity markets nationwide should not result in unequal or inadequate environmental standards becoming a subsidy for generation by the most polluting fossil-fueled power plants, while also undermining safety standards at nuclear power plants. Increased competition among power suppliers has already resulted in efforts to shift environmental costs from the generators and consumers of polluting power to society at large, such as the nuclear industry effort to make federal, state, and local taxpayers responsible for all or most of the costs of nuclear waste storage and transportation. Electric restructuring must advance environmental goals: an industry that continues to shift environmental costs to the public is not efficient.

   1. Ensure through national or regional emissions caps (and other appropriate means) that electric restructuring reduces emissions of carbon dioxide, nitrogen oxides, sulfur dioxide, mercury, fine particulates, and radiation.
      
      
   2. Assure that federal and non-federal electricity generators and hydro system operators, facing new competitive pressure and restructuring, include protection, mitigation, and enhancement measures at their projects to address fish and wildlife, recreation, and other environmental impacts caused by their dam operations.
      
      
   3. Strengthen nuclear safety oversight and enforcement during the transition to a restructured industry. Nuclear plants that cannot meet strong safety standards and operate competitively must be shut down.
      
      
   4. Ensure that state and local governments are not pre-empted by the federal government from setting stricter-than-federal standards for health and environmental protection, including those relevant to commercial nuclear reactors.
      
      
   5. Provide affected citizens the right to sue nuclear power plant operators for violating nuclear safety laws and regulations.
      
      
   6. Congress, by legislation, and the Nuclear Regulatory Commission, by rulemaking, should strengthen assurances that workers who blow the whistle on safety problems at reactors are protected from harassment and intimidation by management.
      
      

   
   

6. Acknowledge and strengthen appropriate state and regional regulatory authority.

   Restructuring is reinforcing the electric industry's tendency to organize and act on a regional basis. Federal legislation should acknowledge and strengthen states' ability to resolve siting and other regional restructuring issues that are affected with a public interest.

   1. Preserve state authority over transmission and generation siting and transmission capacity expansion. The power of eminent domain should be granted to transmission and distribution utilities only if the process for planning and siting distribution facilities encourages participation and decision-making by all stakeholders, including intervenors and the general public.
      
      
   2. Encourage the states to form voluntary interstate compacts for the purpose of protecting important public interests as they are affected by regional transmission and bulk power activities. Direct the FERC under appropriate circumstances to delegate all or a portion of its rate regulatory authority to such voluntary compacts.
      
      
   3. Require the representation of public interests on the governing boards of organizations that control the operation of transmission systems.
      
      

   
   

7. Require electricity suppliers to disclose to consumers important information regarding their electricity purchases.

   The entrance of many companies into electricity markets creates the potential for fraud, deceptive marketing, and the abuse of market power. Consumers must be provided with information concerning their energy purchases that is factual, objective, and understandable, so that consumers can make informed choices.

   1. Ensure that wholesale and retail consumers can easily compare the price, price variability, resource mix, and environmental characteristics of their electricity purchases.
      
      
   2. Require regulators to compile and make publicly available power suppliers' compliance with standards for service quality, universal service, consumer protection, safety, and environmental quality.
      
      

   
   

8. Assure environmental mitigation and consumer protection in operation of facilities used by federal Power Marketing Administrations (PMAs).

   Federal Power Marketing Administrations sell electricity generated by power plants that are owned by the US taxpayer. Most of the electricity comes from hydroelectric facilities, which generate low-cost electricity, but that also create environmental problems that threaten fish and wildlife. Proposals to privatize the PMAs could create additional environmental problems as well as higher electricity prices for consumers.

   We support:

   1. Reforming PMAs to provide for a greater contribution by system users to mitigation of environmental damage attributable to facilities used by PMAs, and to strengthen the role of PMAs in encouraging non-hydropower renewable resources and energy efficiency.
      
      
   2. No significant changes to the structure or operation of the PMAs except under conditions that enhance the environment, protect consumers, and also subject new dam owners to a facility-specific plan incorporated into a temporary FERC license to be followed by a full FERC license within a reasonable period of time.
      
      
   3. Preventing costs, including long-term system debt, from being shifted inequitably from larger users onto residential and small rural consumers as the PMAs adjust to competitive wholesale markets.