SAN DIEGO – Declaring that electricity deregulation will bring "all pain, no gain" for the nation's consumers, the nation's largest consumer federation Wednesday called for a halt to further government efforts toward deregulation.
The Consumer Federation of America cited the California electricity crisis and problems elsewhere as evidence that any benefits from competition are far outweighed by risks and additional costs brought on by opening tightly regulated electricity markets.
A report from the federation, composed of more than 200 groups totaling 50 million members, noted "monopoly overcharges," or the ability of suppliers to withhold or simply overprice their electricity, along with higher costs for plant building and administration as the consumer risks of deregulation.
"The evidence that radical restructuring and deregulation will result in higher costs has become overwhelming," the federation concluded in its study distributed Wednesday.
Mark Cooper, research director of the federation and author of the report, said despite the evidence, state regulators and federal officials are headed in opposite directions on deregulation.
"Every state outside of the Northeast that has started down the path to restructuring has stopped or slowed down," said Cooper. "The ironic thing is that federal authorities and (the Federal Energy Regulatory Commission) just want to charge ahead."
Cooper called for a halt to efforts to repeal the Public Utility Holding Act, a Depression-era law that limits interlocking corporate ownerships. The law focuses utilities on providing service to customers, rather than organizing complex business structures, he said.
"Rather than repeal (the law), it should be strengthened," Cooper said.
He added that FERC should "take a step back" from pressing to impose a standard electricity market design on the nation, which suppliers say will standardize what is now a hodgepodge of state rules and allow them to broaden the scope of national energy trading.
Cooper said the FERC action was coercing publicly owned utility districts – which serve about one-quarter of the nation – into participating in what could be expensive deregulation efforts.
But a spokesman for FERC said its objective was to create a market plan that would avoid problems such as the cost-inflating schemes made famous by Enron Corp.
"If we want to make sure those things don't happen, we need a standard market design," said Kevin Cadden, the FERC spokesman. "Whether a state goes to retail electricity competition is a state decision. Competition in the wholesale market is here, and it's here to stay."
