[Congressional Record Volume 142, Number 102 (Thursday, July 11, 1996)]
[Extensions of Remarks]
[Page E1255]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




     THE ELECTRIC POWER COMPETITION AND CONSUMER CHOICE ACT OF 1996

                                 ______
                                 

                         HON. EDWARD J. MARKEY

                            of massachusetts

                    in the house of representatives

                        Thursday, July 11, 1996

  Mr. MARKEY. Mr. Speaker, today I am introducing legislation aimed at 
promoting competition in the electric utility industry. This 
legislation seeks to create Federal incentives for removal of existing 
State-level barriers to full competition and consumer choice in 
electricity generation.
  Today, the generation, transmission, and distribution of electricity 
remains largely a monopoly enterprise. The monopoly nature of this 
industry has, in turn, necessitated a very strict system of Federal and 
State utility regulation aimed at protecting captive utility ratepayers 
from potential overcharges, abuses and conflicts of interest. Today, 
however, we are now at a crossroads. We now have an historic 
opportunity to bring full competition to the business of electricity 
generation. The transition to such a competitive market, however, will 
require both Federal and State action.
  Electricity restructuring legislation at the Federal or State level 
should be aimed at demonopolizing the electric power industry, not 
simply deregulating it. There is now no reason why electricity 
generation should remain a monopoly business, and no reason why 
consumers should not be free to choose their power supplier, just as 
they now can choose between rival phone companies. Our objective must 
be to create a competitive marketplace where many sellers and many 
buyers can come together. In some cases, this may mean getting rid of 
old utility regulations that no longer are needed because their purpose 
can now be achieved through reliance on market forces. In other cases, 
it may mean preserving existing rules where necessary to respond to 
those aspects of the industry which remain a monopoly, such as 
distribution of electricity over local power lines. But restructuring 
also means Congress will have to enact some new rules that assure the 
benefits of competition--lower prices and consumer choice--are not 
effectively undermined by anticompetitive practices by recovering 
utility monopolists who fall off the competition wagon.
  Earlier this year, I introduced H.R. 2929, the Electric Power 
Competition Act of 1996 to advance the goal of electric utility 
demonopolization. That bill linked repeal of the mandatory power 
purchase provisions of PURPA to State action to open up full retail 
competition. This would be achieved either through utility divestiture 
of powerplants or by State approval of a so-called retail wheeling 
plans that would allow consumers to buy power from competing generating 
companies that would be granted nondiscriminatory access to utility 
power lines. In order to preserve environmentally sound renewable 
energy sources, energy conservation programs, and low-income consumer 
protections, H.R. 2929 also requires the States to certify they have 
met certain minimum standards in each of these areas in order to 
qualify for relief from PURPA. Finally, to promote a fully competitive 
marketplace, certain exemptions which electric utilities currently 
enjoy from the Federal antitrust laws would be repealed.
  At the time I introduced H.R. 2929 and in subsequent hearings before 
the Energy and Power Subcommittee I noted that in addition to these 
reforms, electric utility restructuring legislation also must address 
the risks that electric utility mergers, utility market power, or 
utility diversification into new lines of business might harm 
electricity consumers or undermine the emergence of a fully competitive 
electricity generation market. The legislation I am introducing today 
addresses each of these critical areas and should be viewed as the 
companion bill to H.R. 2929. The bill requires each State to initiate a 
retail competition rulemaking proceeding pursuant to certain Federal 
standards; repeals PUHCA for those electric utility holding companies 
whose service territories have been opened up to full retail 
competition and met minimum standards for renewables, efficiency, and 
low-income consumer protections; and gives FERC and the States enhanced 
authority to oversee mergers and acquisitions to protect consumers from 
transactions that are inconsistent with effective competition in 
electricity markets or would increase electricity prices.
  It also gives FERC and the States authority to regulate utility 
market power to guard against anticompetitive practices; grants FERC 
and the States authority over electric utility interaffiliate 
transactions to guard against cross-subsidization or self-dealing; 
directs FERC to establish regional transmission markets to assure 
functionally efficient and nondiscriminatory transmission and prevent 
pancaking of rates; and, assures FERC and State regulators have full 
access to electric utility books and records.
  It is important to keep in mind that Congress enacted PUHCA 60 years 
ago in response to the myriad of anticonsumer abuses that occurred 
during the initial growth of the electric utility industry. These 
abuses included the creation of complex utility holding companies not 
readily susceptible to effective State regulation, cross-subsidization, 
self-dealing, and other abuses, and blatantly anticompetitive practices 
and activities. While much has changed in the electric power business 
since PUHCA was enacted in 1935, even in a restructured electricity 
industry, Congress must be concerned about the potential for a 
recurrence of such abuses. For example, utilities who control 
generation, transmission, and distribution assets might still engage in 
self-dealing transactions among their affiliates, cross-subsidize 
unregulated business ventures at the expense of the captive consumers 
in their monopoly transmission or distribution businesses, or exploit 
their substantial market power to impede the growth of effective 
competition. Moreover, the accelerating pace of utility mergers 
threatens to create giant mega-utilities that could dominate regional 
electricity markets and effectively bar other entrants from vying for 
customers.
  Comprehensive electricity restructuring legislation must address each 
of these potential threats to the development of a competitive electric 
generation market. I intend for the reform proposals contained in this 
legislation to be considered as part of any comprehensive electricity 
legislation that moves through the Commerce Committee, and I look 
forward to working with my colleagues on a bipartisan basis to secure 
their enactment into law.

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