Committee Reviews Proposed Electricity Deregulation Plan

May 26, 1999

At a hearing today of the Agriculture Subcommittee on General Farm Commodities, Resource Conservation and Credit, Members led by Chairman Bill Barrett (R-NE) reviewed the possible effects that electric deregulation as proposed by the Clinton Administration will have on rural areas.

"It's quite possible that electric restructuring in some form could have a positive effect on utilities and some of their customers in certain areas and industries," Barrett said.  "However, in Nebraska both rural consumers and industry enjoy low cost power, and I fail to see how the Clinton Administration plan could improve our system."

At the request of the Clinton Administration, Chairman Tom Bliley (R-VA) of the House Commerce Committee introduced H.R. 1828 last week.  This legislation contains a federal mandate  which would restructure the nation's electric power generation, transmission and distribution system.  Also included in the plan were numerous provisions unrelated to the central premise of the bill which would impose  environmental regulations similar to those recently struck down by a U.S. Court of Appeals.

"After listening to the Energy Department's witness discuss the Administration's deregulation bill, it's clear that the President is imposing a new agenda of implementing EPA's Clean Air Regulations, recently ruled unconstitutional, by way of large energy corporations salivating for deregulated markets," Barrett said.

In addition to problems related to the questionable environmental regulations in the plan, the Department of Energy's (DOE) representative could not clarify how the Administration arrived at its prediction that $20 billion would be saved by electricity consumers under the proposal.  In addition, he failed to explain how the Federal Trade Commission and the Federal Energy Regulatory Commission could run a new regulatory regime run without increased costs.  Moreover, despite assurances that individual states could "opt out" of the program, the  DOE was at a loss as to how this option would exercised.

"I believe few of us here in the Congress understand the broad implications such changes may bring to our economy, and I am especially concerned about the effects electric power deregulation  -- or, restructuring, if you wish  --  may have on our rural areas," Barrett said.  "Improving efficiency is not enough to justify changes if it unfairly harms people and farmers in rural areas who can't possibly shoulder the burden of higher rates."

Rural areas face significant difficulties in competing for electricity and other utilities due to low populations, absence of economies of scale, and a smaller percentage of industrial customers which all lead to greater costs associated with providing service to these areas.

Barrett represents Nebraska's Third Congressional District — the largest corn-producing district in the country — in the U.S. House of Representatives.