The White House has placed before Congress its new proposed legislation for complete deregulation of the USA’s $200 billion electricity industry. It aims to give all US consumers the freedom to choose their power supplier by 1 January 2003.
The bill is a revised draft of an earlier proposal that was rejected by the 105th Congress. The US Secretary of Energy, Bill Richardson, believes the new bill should pass in this congressional session, although even the revised draft has received far from unanimous support. Previous attempts at passing federal deregulation legislation have met with significant resistance from utility companies and politicians alike.
Wary of the potential for difficulty in passing such a bill through the House, the Clinton plan has steered clear of such controversial issues as stranded cost provisions and the imposition of federal expectations on individual states. Instead the draft bill will allow states exempt status from the ordnance if it is apparent that consumers will benefit more under individual state efforts at deregulation. Currently, around 20 states are in the process of introducing competition to their electricity markets, led by California which restructured its electricity industry last year.Those states that have instigated restructuring legislation have found the issue of stranded costs one of the most difficult to resolve, with utility companies, consumer groups and regulators frequently at loggerheads. Under the Clinton plan stranded cost settlement would also be left to individual states and utilities to determine and resolve, although a competitive transition charge will be applied to electricity sales that will be used to create a $3 billion public benefits fund for the support of low-income families and power workers made redundant by the rigours of the competitive market.
According to the administration, the Clinton proposals will save consumers some $20 billion per year once retail competition has begun, equivalent to $232 for the average household per year or a 5 per cent tax-cut. The so-called Comprehensive Electricity Competition Plan bill closely mirrors the administration’s earlier plans, but has attempted to achieve wider support by revising the plan to allow native Americans and those living in rural areas to gain more benefits.
The new bill’s mandate for renewable generation is 7.5 per cent of capacity by 2010, compared with 5.5 per cent in the old bill. However, hydro-electric generation has not been included in the renewables portfolio, causing consternation amongst its supporters but boosting the potential role of wind power, solar, geo-thermal and biogas applications.
Opponents of efforts to curtail carbon dioxide emissions have criticised the increased renewables mandate as an attempt to ratify the Kyoto Protocol through the “back door”, a claim rejected by the administration. Environmental lobbyists, on the other hand, criticised the provisions for not going far enough.
The revised bill does include provisions for encouraging distributed generation by instigating tax breaks for development of distributed generation technologies such as fuel cells and micro-turbines. In addition, the Clinton proposals call for a reduced transition charge for those consumers purchasing power from on-site distributed generation suppliers.
Several exsisting statutes are also to be repealed under the bill. These include the 1978 Public Utility Regulatory Policies Act (PURPA) and the 1935 Public Utility Company Holding Act (PUHCA).
