In considering Lynne’s note on the new Senate electricity legislation, I couldn’t help but notice that the co-sponsoring senators were not from states that have embraced “competitive energy markets” or done much to “modernize regulation.” Senator Burr is from North Carolina; Senator Cochran from Mississippi; Senator Landrieu from Louisiana; and Senator Lott, also from Mississippi.
I haven’t yet looked at the bill, but the biggest barrier to competition in many of these states is the too comfortable relationship between state legislators, state utility regulators, and the large vertically integrated utilities.
Another problem faced by companies advocating competition, perhaps growing out of comfort with the existing state of affairs, is an ongoing jurisdictional battle between state and federal regulators.
Electric power flowing on the transmission grid on either the eastern or western interconnections are clearly part of interstate commerce and subject to federal jurisdiction, but for some Depression-era law and subsequent precedent. While I tend to see the wisdom of federalism, which allows a variety of policy experiments to be undertaken and allows policy to be adapted to local circumstances, when federalism is an excuse to erect barriers to trade then Congress ought to act to knock down those barriers.
Yet, and here I’m just guessing, somehow I suspect the bill doesn’t do much to clear up jurisdictional disputes between state and federal regulators. More likely? Tax breaks for transmission lines or maybe some sort of endorsement for the idea of “participant funding” of transmission spending.
I could be wrong. (It happens all the time.) In the ongoing saga of energy industry restructuring, this bill may represent “a new hope” for competition. All I am saying is this isn’t likely.
Lynne said she’d analyze and comment on the bill, so we’ll know soon enough.