Comments of the Utility Workers Union of America (UWUA) and the Massachusetts Union of Public Housing Tenants (MUPHT) on serious detriments to consumers of retail electricity competition.

Price gougers have taken advantage of shortages to inflate wholesale energy prices. Low-income families are particularly vulnerable to price increases for essentials. Government can help.

Is the electric industry entering a death spiral? How can consumers be protected? There was a time when local wireline telephone service was affordable (and pay phone calls were a dime), as long as one avoided luxury services such as long distance, fancy telephones, voicemail, and call forwarding. These luxuries were way overpriced, with the regulated proceeds helping keep the costs of local service within reach. Now we are seeing the story repeat itself in the electricity arena. In 1990, electric service was priced at cost, with contributions built in for energy efficiency, low-income support, and other public policy goals. Competition entered the picture in the mid-90s, starting with the generation portion of the service; this has already raised the total bill and now competition for the local part of the service is on the horizon, starting with luxury services such as self-generation, rooftop photovoltaics (PV), combined-heat-and power cogeneration (CHP), so-called microgrids, fuel cells, demand response (DR), and smart homes. The pressure for building the infrastructure that these competitive services need (but dont want to pay for) is much of what the Grid Modernization debate is about. The pressure for luxury and off-grid services, and the associated infrastructure  paid for by all ratepayers to the greatest extent the regulatory structure will allow  comes from such economic players as big industry, "clean energy" technologists, Distributed Generation (DG) promoters, DR promoters, alternative generation manufacturers (e.g., PV, fuel cells) , storage promoters (e.g., fuel cells, flywheels), the computer industry in all its breadth (Google in the DR business), the telecommunications industry (smart homes brought to you by your local cable TV provider), electric vehicle (EV) manufacturers and dealers, infrastructure builders (e.g., undergrounding, GIS mapping, electronic switching), and meter guys. Ultimately this price pressure could squeeze out the energy efficiency and low-income contributions, just as they did the local telephone service contributions, unless public policy intervenes. Public policy should include enforcement of existing bedrock principles, such as requirements that expenditures be prudent, used-and-useful, least-cost, cost-effective, and allocated in accordance with benefits. Public policy goals should include affordability and cost containment. It should be recognized that not everything desirable can be installed on the public network at once for a cost that people can afford. Consideration might be given to a Universal Service Trust supported by new regulated and unregulated services.

Consumers are already burdened with utility bills that have as much as doubled at a time when most incomes have barely risen. Utility proposals to as much as double infrastructure investment must be reconciled with the need for affordable utility service. Key strategies include efficiency and reduction of risk. Special consideration is needed for low-income consumers.

Deregulation has not advanced efficiency or renewable initiatives and has had adverse consequences for consumers, including high and volatile prices, power shortages, and consumer frauds.

How regulation advances both efficiency and renewables and how citizens can participate in that public process.

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Click on document to read Introduction. Based on work for the United Nations by Greg Palast, Jerrold Oppenheim, and Theo MacGregor -- the first step-by-step guide to the way that public services are regulated in the US. The book examines what's right with the traditional American regulatory system, why regulation elsewhere has failed, and what can be done to fix it. It explains how decisions are made by public debate in a public forum. Profits and investments of private companies are capped, and companies are forced to reduce prices for the poor, fund environmental investments, and open themselves to financial inspection. Open this page to read the book's Introduction. E-mail us to order your copy.


TABLE OF CONTENTS
FOREWORD, BY HON. CARL WOOD
DEMOCRACY AND REGULATION: AN INTRODUCTION
CHAPTER I. SECRECY, DEMOCRACY AND REGULATION
CHAPTER II. REGULATING IN PUBLIC
CHAPTER III. COMPETITION AS SUBSTITUTE FOR REGULATION? BRITAIN TO CALIFORNIA
CHAPTER IV. RE-REGULATION IS NOT DEREGULATION
CHAPTER V. THE OPEN REGULATORY PROCESS: STEP-BY-STEP
CHAPTER VI. SOCIAL PRICING
CHAPTER VII. ISSUES THAT ARE PUBLICLY DECIDED
CHAPTER VIII. AN ALTERNATIVE: DEMOCRATIC NEGOTIATIONS
CHAPTER IX. BE THERE: A GUIDE TO PUBLIC PARTICIPATION
CHAPTER X. A HISTORY OF DEMOCRATIC UTILITY REGULATION IN THE US
CHAPTER XI. REGULATING THE MULTINATIONAL UTILITY
CHAPTER XII. FAILED EXPERIMENTS IN THE UK AND THE US
CHAPTER XIII. THE BIGGEST FAILURES: CALIFORNIA AND ENRON
CHAPTER XIV. INTERNATIONAL DEMOCRACY – DEVELOPING AND DEVELOPED COUNTRIES
CHAPTER XV. CONCLUSION


CALIFORNIA PUBLIC UTILITIES COMMISSIONER CARL WOOD, in the Foreword: "Palast, Oppenheim and MacGregor have drawn on a vast pool of practical experience, wide international contacts and profoundly democratic motivation to examine and explain the U.S. utility regulatory system as a model for an epoch which is characterized worldwide by the sudden and often unconsidered privatisation of essential utility services previously owned and operated (however well or poorly) for the public good."

R. A. MILLER, WESLEYAN UNIVERSITY in CHOICE: This volume discusses governmental regulation of public utilities--firms supplying electricity, gas, telephones, and water. Regulation works best, the authors argue, when regulators adhere to the democratic process: public access to information, public participation in setting prices. The US democratic process is generally superior to that elsewhere, e.g., in South Africa, India, Peru, the UK, Mexico, Bolivia, Brazil, and other countries. The authors (an economist-reporter, a lawyer, and a regulator) have a wealth of experience in utility regulation, and it is evident on every page. The recent electricity crisis in California (and Enron's participation) receives considerable attention. Throughout the book the democratic process receives most of the credit or blame. Unfortunately, the economic analysis is either weak or incomplete (e.g., no mention of the contribution to the California electricity crisis of either the drought in the Pacific Northwest or the prohibition of forward contracts). The authors' detailed description of the US utility regulatory system will be especially useful to those new to the topic. A companion source of information to this book is a Web site containing updates and additional documentation. Summing Up: Recommended. Public and undergraduate library collections."

MEG POWER, NATIONAL COMMUNITY ACTION FOUNDATION: "This masterpiece suggests the way the whole world should see the amazing system of utility governance we Americans take for granted. This book is required reading for anyone committed to maximum feasible participation of those directly affected by public policy."

ENTERGY CORP. STRATEGIC PLANNING MANAGER BENGT JARLSJO: “Very informative, unique, and uplifting. I believe that every person, including regulators, environmentalists, consultants, and employees, working to implement new projects, rates, and programs for regulated companies should consider DEMOCRACY AND REGULATION required reading.”

ICELAND CONFEDERATION OF STATE AND MUNICIPAL EMPLOYEES (BSRB) OFFICIAL ANNA ATLADOTTIR: "Your book is a tremendous help in my work as the Icelandic member Of The Standing Committee on Public Utilities of the European Federation of Public Services Unions (EPSU). Thank you for setting forth complicated issues in such a way that ordinary people are able to understand them."

NATIONAL CONSUMER LAW CENTER: "DEMOCRACY AND REGULATION is a valuable book for those who believe in regulating utilities in the public interest, filled with useful data, tables and ample footnotes."

EUROPEAN FEDERATION OF PUBLIC SERVICE UNIONS (EPSU) “recommends the book as a valuable contribution to what will inevitably become the new battleground in Europe’s liberalised energy markets: how to control powerful profit maximising, often transnational, energy companies, ensuring they deliver a reliable and affordable public service. Competition is not the answer but democratic regulation is.”

NEW HAMPSHIRE PUBLIC UTILITIES COMMISSIONER NANCY BROCKWAY: "If you have no other books on public utilities, you should have this one. Palast, Oppenheim and MacGregor provide a timely and thoroughly documented analysis of the necessary role of the public in overseeing provision of electricity, gas and other utility services in a free market society. DEMOCRACY AND REGULATION is a timely reminder that these essential services cannot simply be left to the invisible hand of the market, or worse to the inscrutable hand of the back-room deal."

The purpose of this paper is to describe, from the residential customer point of view, the regulated generation services that remain necessary in a restructured electricity marketplace in order to make sure all residential customers retain electricity service at all times. Many refer to this idea as Provider of Last Resort (POLR) service.

Testimony before the Texas PUC on the importance of ensuring just and reasonable Provider of Last Resort (POLR) service after electric industry restructuring.

A national survey of the energy burden faced by low-income customers and programs designed to lower that burden, including payment assistance, energy efficiency, weatherization, and arrearage management, and the cost-effectiveness thereof.

A study prepared by Synapse Energy Economics with the assistance of Theo MacGregor for the West Virginia Consumer Advocate Division of the following consumer protection measures: divestiture of generation, codes of conduct, licensing standards, reliability of distribution services, consumer education, and disclosure of information in a restructured electricity industry. The report was presented in the testimony of Tim Woolf of Synapse before the West Virginia Public Service Commission, Case No. 98-0452-E-GI.

By Nancy Brockway and Jerrold Oppenheim. For states restructuring their electricity industry, this model provides a guide to consumer protections that must be incorporated in any restructuring statute and regulations. More fully explained in the AARP Handbook. Please use this with caution -- while most of the suggestions remain useful whether or not a state is restructuring its electricity industry, some are out of date. For example, the wisdom of the divestiture option has been disproven by events and states that have enacted divestiture now need rules for power acquisition (see POLR section of this web site). Note also that this Model was written on the now-outdated assumption that enactment of retail competition is unavoidable. However, most of the suggestions remain useful in both restructured and conventional states, For example: "Cap The Gap," consumer protections, and low-income rates and protections.

This Handbook for a model bill is written as if a state has decided to introduce retail competition into the sale of electricity, but it contains strategies for consumer protections that are valid for any utility industry structure. The Handbook is to be used with the AARP Model Statute.

This Code of Conduct sets forth the Standards of Conduct governing the relationship between an electric or natural gas distribution company and its affiliates transacting business in Massachusetts.