VIEWS FROM THE FRONTLINE

Compiled by Pam Boschee

News Editor

Steve R. Spencer

Senior Vice President

Southern Company

There`s currently a shared belief in America that competition is better than a monopoly. And clearly we can already see within our industry the benefits of wholesale competition in the form of market-based pricing for wholesale customers. Southern Company supports competition. We believe all customers should benefit from competition. Our concerns center around the transition to retail competition and its ultimate form. We want to make sure that the transition is fair to all parties, that the timing makes sense and that the final form of competition is workable.

More than 40 states have either enacted legislation, amended regulations, or are actively addressing reforms to traditional electric regulation based on their customers` needs and priorities. We believe that the federal government should not impose a date certain for retail competition on the states. The transition to competition should be done in an orderly way, under a bright light, with participation by all interested parties, and with state regulators and legislators addressing their jurisdictional issues.

The transition to competition must be based on the following principles:

Customer benefit: Assure all customers-large and small-will benefit, or at least not be harmed, from a cost, service and reliability perspective.

Stranded cost recovery: Assure the transition honors past regulatory commitments by providing for the recovery of legitimate stranded costs through FERC and the states.

State authority: Recognize the authority of and the differing circumstances among the states regarding retail electric service and avoid federal mandates for retail access. State and regional approaches should continue to be allowed to evolve.

Subsidies and preferences: As we transition to markets, where electricity suppliers are competing for the same customers, it is essential that the same consistent rules apply to all suppliers. Eliminate distortions to competition, including PUHCA and PURPA.

Southern Company believes that success in an open, competitive market should result from companies working harder and smarter for their customers.

Chris King, CEO, utility.com

Utility.com favors federal legislation. We would support providing the states with incentives rather than mandates. Our position is based on several reasons.

First, America`s economic history is that competition results in lower prices and better service in every industry and every geographic region.

Second, customer choice should be the right of every consumer, especially when energy is typically the third-largest household expense (after housing and food). Why should government select a person`s energy supplier any more than government tells that person where to live or buy groceries.

Third, while the states should retain some authority, “patchwork” deregulation results in higher costs for energy suppliers, which means less savings for consumers. Federal legislation should promote nationwide standards and operating rules; this will increase customer choices and increase savings.

Dave Penn, Deputy Executive Director, American Public Power Association

State restructuring activities are creating new rules in the electric marketplace that are inconsistent with various federal laws. For example, the U.S. tax code “private use” limits prevent public power systems from full and active participation in the new market. Resolving issues such as this must be an integral part of any federal restructuring legislation.

Rampant mergers and reconsolidation of the old electricity empires are visible reasons that legislation also needs to address growing monopoly power in electricity markets, including augmentation of FERC authorities to mandate effective regional transmission organizations and participation and to order divestiture as a last resort. Order 888 is not getting the restructuring job done. In addition, such legislation is needed to rationalize reliability standard-making and enforcement, and to clear the legislative undergrowth so states are not hindered in making their own choices about retail wheeling.

Steve R. Spencer is senior vice president of external affairs with the Southern Co., a utility holding company and global energy conglomerate based in Atlanta, Ga. Chris King is CEO of utility.com, an energy service company located in cyberspace at www.utilitycom and in the real world in Albany, Calif. Dave Penn is the deputy executive director of the American Public Power Association in Washington, D.C.

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The Clarion Energy Content Team is made up of editors from various publications, including POWERGRID International, Power Engineering, Renewable Energy World, Hydro Review, Smart Energy International, and Power Engineering International. Contact the content lead for this publication at Jennifer.Runyon@ClarionEvents.com.

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