by Kyra Epstein
If done right, electric-utility restructuring could mean more efficiency
and renewables, and therefore less air pollution and global warming. So far however, state
legislators have done the bidding of utilities. The environment and our children's health
will pay the price.
When I hear about electricity-utility restructuring in my area, I feel: a. Giddy
excitement - we can finally start to clean up air pollution! b. Dread and foreboding - air
pollution is going to get worse! c. Incredible confusion about the entire subject. Most
of us would choose answer (c), but even experts across the country don't seem to agree on
either (a) or (b).
The electric-utility industry is being restructured - legislation has either already
been passed in your state or is being considered. This may mean that you can finally
choose which company sells you your electricity and how it is generated.
But breaking up a historic monopoly, as tormented airline and long-distance phone
customers would agree, does not always mean lower prices, more reliable service or fewer
headaches for customers.
And because this industry is one of the largest air polluters in the nation - 65
percent of the acid-rain-causing sulfur dioxide, 36 percent of the global-warming gas
carbon dioxide and 29 percent of the smog precursors nitrogen oxides - the outcome of the
restructuring "experiment" is critical, not just inconvenient.
For 60 years, electricity has been provided by a single company in each service area
with a regulatory body overseeing rates and policies. Now, through restructuring,
regulations are being eased and the market is being opened to anyone who wants to compete
for consumer dollars.
"If you care about clean air and water and curbing global warming, if you are
concerned about protecting our resources and if you care about off-shore drilling issues,
you have a stake in electric-utility restructuring," said Dan Becker, the Club's
Global Warming and Energy Program director in Washington, D.C. "Depending on how
restructuring is done, we can either accelerate the devastation of the environment or we
can make a down payment on stopping global warming by moving toward cleaner energy."
The track record so far is poor. In most states where restructuring has opened up the
electricity market, energy conservation and renewable energy are taking a backseat to the
demands of utilities in restructuring legislation.
Since Congress probably won't agree on federal legislation for at least two years,
states that have not restructured are the battleground for legislation right now. But Rich
Ferguson, Sierra Club California's Energy Committee chair, warns states to look before
they leap into restructuring: "Before promoting new legislation, each state should
decide if what's proposed is really going to foster competition or just unregulate
monopolies."
Case in point: Rhode Island, the first state to allow competition in the
electric-utility market, is not experiencing the results that advocates of restructuring
had hoped for. Even Sierra Club activists, who opposed the restructuring bill, had hoped
that competition would bring some positive outcomes like an expansion of renewable energy
markets or the demise of nuclear-power plants.
"We knew we didn't get the requirement we wanted for renewable energy in the
state's power mix, but we didn't realize the law wouldn't even lead to real
competition," said Karina Lutz, Rhode Island Chapter director. "The competition
for residential customers is mostly between the old monopoly and its spinoff 'green'
subsidiary - which, of course, charges more."
Overall, energy use is at an all time high, which has motivated utilities to re-open
plants that had been retired for safety reasons, or to continue operating plants that
should have been retired. "We were concerned that this kind of legislation would
increase energy use rather than conservation, and it appears that we were right,"
said Lutz. "Expensive nuclear-power plants we thought would close down were brought
back to life in spite of safety concerns."
Lesson learned in Rhode Island: Make sure legislators feel the pressure to address
environmental concerns. Good legislation, according to Nancy Hirsh, the Club's Energy
Committee chair, would include a requirement for renewable energy supplied in each state.
Good legislation would also include "public good" charges to ensure that
low-income families get the power they need and that renewable energy and conservation
programs are funded and managed by an independent agency.
In California, environmentalists won a few provisions in the state's legislation,
including funding for energy efficiency, renewable-energy research and low-income
programs. "California has a 'public goods charge' administered by an independent
agency," said Ferguson. "You'll see the charge as a line item on your bill and
the money is administered by independent, non-utility public agencies."
But California environmentalists and consumer advocates lost on the issue of stranded
costs. These are costs incurred by utilities that spent money on nuclear and other
expensive power plants, but which new regulations prevent from being recouped over time
through normal customer charges. The utilities fought for - and won - a legislative
provision requiring state residents to pay a "competitive transition charge," an
extra fee for each kilowatt hour to go toward payback for stranded costs.
The issue is back on California's fall ballot as Proposition 9, the Utility Rate
Reduction and Reform Act. The proposition, written by consumer advocates, would repeal the
sections of legislation that guarantee utilities high, above-market prices for nuclear
power and full capital recovery for their nuclear plants. The Sierra Club has not yet
taken an official stand on the proposition.
Meanwhile, the Club's Energy Committee has prepared and distributed a guidance document
on restructuring and is currently working on an official guidance document on
green-electricity products.
There are two ways that you can make a difference. If your state has not yet
restructured, you can demand that your legislators promote clean and renewable energy.
"Activists need to write their representatives and work with their local chapters to
make sure legislation will protect the environment and reduce air pollution," said
Hirsh. Contact your chapter to find out how to get involved.
If legislation has already been passed in your state, you can use your dollars to vote
for green energy. It's up to you to ask for it; in some states consumers automatically
stay with traditional providers unless they specifically ask to switch to another energy
supplier (see "Getting Green").
For more information on your state's legislation, call your chapter office or
check on the Department of Energy Web site at www.eia.doe.gov/cneaf/electricity/chg_str/tab5rev.html.
The other three sections of this feature:
Definitions. What are stranded costs, anyway?
Swimming in the power pool.
Guide to getting green.
http://www.sierraclub.org/planet/199807/util.asp
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