Electric utilities expected to pull out all stops to pass deregulation bill

Consumers’ worst fears are being realized as the results of electric industry restructuring plans have started coming in from the states that have rushed ahead to be first. In state after state, legislation touted as creating competition has resulted in little choice for small consumers, and only token improvements in energy assistance for low-income families or minimal investments in environmentally friendly power generation.

The main outcome of these bills has been billions of dollars in bailouts for monopoly electric utilities and the associated nuclear power industry, increased mergers, acquisitions and consolidations of electric utilities, and sweetheart deals for large industrial consumers.

In Indiana, Hoosiers won a brief reprieve as radical electric deregulation legislation was once again defeated in the 1998 session of the Indiana General Assembly. Introduced by Sen. Morris Mills (R-Indianapolis) on behalf of two Ohio-based monopoly electric utilities, Cinergy and American Electric Power, and their large industrial allies, SB 431 was a repackaged version of the anti-consumer electric deregulation bill introduced in the 1997 legislative session by the same special interests.

CAC opposed the 1998 legislation as it did the 1997 bill because it would not have created a robust competitive environment in Indiana as the companies claimed. Instead, it would have prevented true competition and removed important consumer safeguards.

Chief among the consumer protections that would have been effectively eliminated was "universal service," or the fundamental belief that all Hoosier households have a right to enough electricity at rates they can afford to meet their needs. As the bill was written, residential consumers would have been prevented from having any meaningful choice of utility provider for many years, and the legislation would not have ensured that customers have the information they need to make those choices.

In addition, SB 431 would have created an unfair market advantage for out-of-state utilities like Cinergy and AEP at the expense of Indiana-based utilities and other competitors, and would have allowed the shifting of costs to residential customers through "special contracts" and other "sweetheart" deals for large industrial customers.

Indiana’s five investor-owned utilities are now meeting in private in an attempt to iron out their differences and to craft a new deregulation scheme.

Ultimately, SB 431 would have turned decades of electric energy policy on its head, eliminating the long-standing public policy goal of ensuring that all Hoosiers have access to enough electricity to meet their needs at rates they can afford and with minimal environmental impact.

Because this anti-consumer legislation failed to pass in 1997 and 1998, Cinergy, AEP, and their large customer allies are now trying to entice the three Indiana-based investor-owned utilities, NIPSCO, IPL and SIGECO, to join their ranks for the 1999 General Assembly. These five utilities are now meeting in private in an attempt to iron out their differences and to craft a new deregulation scheme.

Should these utility giants unite behind a single deregulation bill, they will bring all of their lobbying and political power to bear on your state legislators (See related article, Page 1).

In the past, when big electric monopolies and their largest customers have pushed major legislation, they have started lobbying legislators six months or more ahead of time, obtaining promises of support from lawmakers on legislation that has not even been drafted and filed.

Deregulation schemes crafted solely by utility monopolies will put the public’s right to affordable rates, universal service and a clean environment at risk. Only true reform, crafted with public input and in the public interest, can protect affordable rates, universal service and the environment.

CAC is working to ensure that any electric industry restructuring plan passed in Indiana results in true reform and not sham deregulation. To do so, such a plan must meet certain public interest requirements and guarantee that real competition and real savings exist for all consumers before deregulation is allowed.

In addition, safeguards to prevent market power abuses, to protect workers and the environment must be included among the public interest protections contained in any legislation.

Ask your State Senator and Representative to tell the lobbyists for electric monopolies that making premature commitments on electric utility deregulation is unacceptable. Urge lawmakers to support only real reform, after it has been publicly debated and only if it meets the public interest criteria cited above.

Write your legislators in care of the Indiana Statehouse, Indianapolis, IN 46204. Or call the Senate switchboard at 1-800-382-9467, or the House switchboard at 1-800-9600 and -9700.

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