Regulation Policy

Energy Department Reports On Electricity Deregulation

The Department of Energy (DOE) has issued a controversial report designed to support a Clinton administration plan to spur and coordinate state electricity deregulation. The report predicts that all regions of the U.S. will benefit from the department's plan for a more competitive electricity market by 2010.

  • The DOE claims that when deregulation produces competition at the retail level, prices will drop by 12 percent over the next 12 years -- even though utilities will be allowed to collect an estimated $85 billion from consumers for "stranded costs."

  • In New York -- where prices are among the highest in the nation -- residential users will experience the deepest cuts in their electricity bills.

  • The report is based on an assumption that federal power producers -- such as the Tennessee Valley Authority -- will keep operating and that all consumers will have a choice between competing power companies by 2010.

  • The report floated the idea of extending the life of nuclear plants by concentrating operations "in the hands of firms with a proven record of efficient, safe and economical operation."

Industry analysts are reportedly skeptical about the DOE projections. They note that "transition costs" have been added to California residents' electrical bills -- causing them to go up rather than down. Residential users who currently live in low-cost states such as Washington might see their electricity prices go up as power is shifted toward higher cost markets.

Source: John J. Fialka, "DOE Study Predicts All Regions Will Benefit From Deregulation Plan," Wall Street Journal, July 23, 1998.

Home | Support Us | All Issues | Social Security | Debate Central | Contact Us

Dallas Headquarters: 12770 Coit Rd., Suite 800 - Dallas, TX 75251-1339 - 972/386-6272 - Fax 972/386-0924
Washington Office: 601 Pennsylvania Ave. NW, Suite 900 South Building - Washington, DC 20004 - 202/220-3082 - Fax 202/220-3096
© 2001 NCPA