Breaking News
Fall 2002
Other Groups Review Restructuring
The summer of 2002 produced a small crop of restructuring analyses by environmental
and/or consumer advocate groups. In addition to the NCAT study mentioned above, Citizens
for Pennsylvania's Future, the Consumers Federation of America, and Consumers Union have
issued detailed assessments of electric restructuring and its effects on residential
consumers.
The environmental group Citizens for Pennsylvania's Future readily admits that ".
. . electricity restructuring of wholesale markets . . . and the restructuring of retail
markets that began in 1996 appear to be hopeless failures." However, Electricity Competition: The Story Behind the Headlines
also claims that residential rates fell by an
average of 13.6 percent in restructured states. The study also found that states with
retail competition were much more likely to require that some percentage of electricity
supply come from alternative energy sources.
In contrast, the Consumer Federation of America study reports that consumers in states
with restructured electricity markets are paying higher prices and receiving less reliable
service than those in unrestructured states. Electricity Deregulation and Consumers:
Lessons from a Hot Spring and a Cool Summer urges any state that has not
restructured to avoid it; advises states than can slow down or stop to do so; and asks
federal regulators to work to ensure competitive interstate wholesale markets and an open,
reliable transmission system.
The far-reaching Consumers Union study, which appeared in the July 2002 issue of Consumer
Reports, analyzed the consumer effects of deregulation in the airline, telephone,
cable TV, banking, and electricity industries. The article maintains that rates have
fallen because of regulated cuts, not because of competition, and that consumers can
expect more volatile price swings and spikes when the rate caps expire. Information on
electricity restructuring can be found on CU's
website.
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