News Release

Electricity and Deregulation: More Corporate Scams?

WENONAH HAUTER
TYSON SLOCUM
Hauter is director of Public Citizen’s Critical Mass Energy and Environment Program; Slocum is research director for the group. Hauter said today: “The House blackout hearings today and tomorrow will be nothing more than a high-wire act promoting transmission policies benefiting Enron-esque power marketers at the expense of consumers. That’s because the House proposes sticking consumers with a $100 billion tab for the construction of new transmission lines that big energy companies want but consumers don’t need. Instead of pandering to an electric industry that gave more than $40 million to Congress since 1999 (more than two-thirds to the GOP), the focus of the hearings should be on protecting consumers by re-evaluating the wisdom of deregulation. After all, deregulation is the main factor behind the blackouts. First, America’s transmission system was designed to accommodate local electricity markets, not the large, freewheeling trading of electricity and movement of power over long distances under deregulation. Sending power over a much wider area strains a transmission system designed to serve local utilities. Second, deregulation means utilities are no longer required to reinvest their profits back into the transmission system. That’s why re-investment in wires has fallen by hundreds of millions of dollars since deregulation: energy companies simply aren’t willing to invest their money where there’s no chance of making runaway profits. To make matters worse, President Bush and Tom DeLay want to eliminate the ability of citizens to have any input on the construction of new transmission lines.”
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ENVER MASUD
Masud managed the U.S. National Power Grid Study in 1980 and the National Electric Reliability Study for the U.S. Department of Energy. Since 1987 he has consulted internationally in the electric power sector. He set up and directed the Operations Review Division at the Iowa Commerce Commission which, among other things, persuaded Iowa utilities to better coordinate operations for savings of $50 million annually. He said today: “President Bush claims that the blackout was due to ‘antiquated transmission’ — a result of not having a fully competitive market. Not true — the blackout was a failure of system protection schemes. The ‘antiquated transmission’ is yet another outcome of failed utility restructuring and the promotion of ‘competition’ which provided independent power producers an opportunity for greater profits than under traditional utility regulation.”
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HARVEY WASSERMAN
Wasserman, who lives in Ohio, is author of The Last Energy War: The Battle Over Utility Deregulation. He said today: “The barons of electric power, like FirstEnergy, based here in Ohio, claimed deregulation would bring lower prices and increased reliability, but the opposite is twice true. With no one minding the store, FirstEnergy has operated the Davis-Besse nuclear plant with a hole in its head, has spent $400 million to bring it on line without ever consulting the public, and has set off the unprecedented blackout of 50 million people, all while raising rates and swallowing other utilities. When it was deregulated by the Ohio legislature … FirstEnergy took nearly $9 billion in ‘stranded cost’ subsidies from the ratepayers, allegedly to help bring about competition. Because FirstEnergy and its president, Anthony Alexander, have raised huge amounts of money for George W. Bush, they are above the law, and will not be prosecuted…”

For more information, contact at the Institute for Public Accuracy:
Sam Husseini, (202) 347-0020; or David Zupan, (541) 484-9167