SCHAEFER BLAMES GOVERNMENT FOR UTILITY PROBLEMS

[Matt Freedman <freedman@Citizen.ORG>]

  CHAIRMAN SCHAEFER BLAMES GOVERNMENT REGULATION 
  FOR PROBLEMS IN UTILITY INDUSTRY
  
  On January 11, Representative Dan Schaefer (R-CO) addressed a
  conference of utility CEOs held by the Edison Electric Institute.
  
  Rep. Schaefer is the Chairman of the Energy and Power
  subcommittee of the House Commerce Committee and has jurisdiction
  over legislation that would rewrite federal regulations governing
  interstate electricity transactions.  Schaefer has publicly
  committed to introducing legislation this year that would modify
  the Public Utility Holding Company Act of 1933 (PUHCA) and the
  Public Utility Regulatory Policies Act of 1978 (PURPA) to allow
  for greater competition and less regulation of electric
  utilities.  At the conference, Schaefer made the following
  remarks: (this is only a portion of his speech)
  
       	"I and every other Republican chairman in the House of
  	Representatives has a mandate from our leadership to deregulate
  	and cut government wherever possible.  The level of government
  	regulation in the utility business frustrates me greatly. 
  	Monopoly regulation is the very height of government interference
  	in the free market.  Instead of letting the free market work, the
  	government has imposed the very worst kind of command and control
  	regulation on utilities.."
  
       	"I think most in this room will agree with me that it is
  	this very system of command and control regulation that has led
  	to many of the worst problems facing the utility industry today. 
  	I am constantly reminded by your companies how the system has
  	failed this industry.  PURPA has locked you into bad contracts. 
  	The Fuel Use Act [of 1978] forced you into nuclear power, only to
  	have the government later pull the rug out from under your
  	nuclear investments.  PUHCA keeps you from competing.  State
  	regulators force DSM and social engineering experiments on you. 
  	And so on.  The list of evils visited upon this industry by its
  	regulators is a long one."
  
  It is interesting to note that Chairman Schaefer fails to assign
  any of the blame for high rates to electric utilities sinking
  billions of ratepayer dollars into uneconomical generation assets
  like nuclear power plants.  Nor does he acknowledge that the
  system of monopoly regulation provided billions of dollars in
  guaranteed profits to utilities over the last several decades. 
  It's hard to feel bad for an industry that receives a generous
  and guaranteed rate of return.
  
  It is also odd that Schaefer would claim that the Fuel Use Act of
  1978 "forced" utilities to invest in nuclear power plants.  There
  have been no successful orders of new nuclear plants since 1973
  and no utility has even tried to order a plant since 1978.  This
  fact would seem to contradict Schaefer's assertion.  Furthermore,
  the claim that government actions pulled "the rug out from under
  your nuclear investments" is confusing and unsupported.  Perhaps
  he is referring to new NRC regulations issued after the accident
  at Three Mile Island that required safety improvements to reduce
  the risk of additional accidents.  The only other major actions
  taken by government involved state regulators disallowing some
  imprudent nuclear costs when it became clear that placing huge
  cost overruns into the rate base would have raised rates
  dramatically for consumers.
  
  Chairman Schaefer has advocated sustainable energy policies
  in Congress, spearheading efforts to protect funding for
  renewable energy R&D programs and save tax credits for wind
  and biomass.  Why would he call sustainable energy policies
  implemented at the state level "social engineering experiments?" 
  Clearly, energy efficiency programs have reduced the need for new
  power plants, thereby saving consumers money and avoiding the
  environmental impacts associated with additional fossil and
  nuclear fuel use.
  
  One would hope that in the rush to reduce regulations and cut
  government, legitimate concerns raised by environmental and
  consumer groups about a wholesale repeal of PUHCA and PURPA will
  be taken as seriously as those of utilities, industrial customers
  and independent generators.
  
  If you want to contact Congressman Schaefer, his address is:
  
            Honorable Dan Schaefer
            2353 Rayburn House Office Building
            Washington, D.C. 20515
            Phone (202)225-7882
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  Matthew Freedman               \\\
  Public Citizen                (+ +)   freedman@citizen.org
  Critical Mass Energy Project    * 
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