Blueprint for US Electricity Restructuring
Initially, restructuring the electric-power industry so that
competition could replace monopoly was considered a positive
development for both the environment and consumers. Concern has
grown recently that competitive pressures could result in
utilities' abandoning the pursuit of energy efficiency and
renewable energy to cut costs. These fears seem to be justified
as utilities throughout the U.S. cut demand-side management (DSM)
program budgets, citing competitive pressures.
Despite the obvious advantages of renewable-energy technologies,
utilities have remained averse to introduce these technologies.
A recent survey by Greenpeace of the nation's utilities found
that renewable energy sources account for only 5 percent of
220,000 megawatts of generating capacity that is new or planned
for the period between 1990 and 2014. At the same time, it has
become clear that the U.S. Climate Change Action Plan, which
relies largely on voluntary action from the country's utilities,
will fail to meet its commitment to stabilize U.S. CO2 emissions
during the period 1990-2000.
In this uncertain phase, before comprehensive restructuring
legislation is passed by Congress (scheduled to take place in
1997), utilities are working to increase their market power by
merging to gain control of ever larger markets, by investing in
risky ventures at home and abroad and by acquiring and being
acquired by manufacturers of generating plants and fuels. The
consequent loss of political and economic accountability results
in minimal consumer choice and control, and increasing
Environmental Action seeks to ensure that low-income households
are not disproportionately burdened by rising energy costs, that
renewable-energy growth is nurtured, and that programs for energy
efficiency are not abandoned. Together with Public Citizen, the
Union of Concerned Scientists, and the U.S. Public Interest
Research Group, we are developing a set of principles for utility
restructuring legislation that local, state, and national groups
can use as a guideline in lobbying for consumer and environmental
safeguards. The principles of the blueprint are:
- The transition to a competitive market must offer significant
savings to all consumers, including low-income consumers.
- Utility restructuring should not result in a widening gap
between the respective rates paid by small and large consumers
- Relieving utilities of any liability for damage and losses
caused by their decisions would penalize efficient utilities and
consumers. No less than 50% of damages and losses should be
recovered from shareholders and no more than 50% from ratepayers.
- Utilities should separate their generation, transmission, and
distribution assets into distinct and unaffiliated corporate
- An independent energy agency should be created to ensure
independent oversight and administration of energy efficiency,
low-income, and R&D programs. This agency would coordinate and
adopt measures to ensure that all money collected for this
purpose from the electricity system was disbursed through
competitive bidding, effectively spent, and directed to
high-priority programs that serve the public interest.
- The aggressive pursuit of energy efficiency must not be
compromised by the switch to competitive electricity markets.
Funds for this should be collected through a system that cannot
be bypassed, then disbursed by the Independent Energy Agency.
In addition, state-guaranteed access to below-market loans for
efficiency improvements would help consumers.
- Funding for energy assistance for low-income consumers must be
- Consumers must be protected against any unfair business
practices. There must be full disclosure of each company's
resource port folio and environmental impacts.
- States must ensure that adequate support is available to
develop and deploy new technologies that increase transmission
and distribution efficiency, allow distributed generation, and
reduce or prevent pollution, e.g., by a system benefits charge.
- The growth of renewable-energy generation must be a priority
for any restructured system. A renewables portfolio standard,
applied to all retail suppliers of electricity, should be used
to increase resource diversity from current levels.
- Competition must produce improvements in environmental quality.
States should consider a range of mechanisms to achieve pollution
reductions, including pollution charges.