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NEWS RELEASE
Nov 14, 2002


CONTACT: Doug Heller - 310-392-0522 x309

Bush Energy Deregulation Plan Put On Hold

Energy Industry Must Be Regulated And Held Accountable Under Future Legislation, Say Consumer Advocates
Santa Monica, CA-- Federal energy legislation died in conference committee Wednesday, which means consumers have temporarily escaped the energy industry lobby's attempt to further deregulate the nation's electricity system. Consumer advocates warned that the Bush Administration will likely push another deregulation bill next year setting the stage for a national version of the California energy deregulation crisis. The nonprofit, nonpartisan Foundation for Taxpayer and Consumer Rights (FTCR) is urging citizens to contact their lawmakers and President Bush to demand that energy deregulation be taken off the table altogether.

"As foolish as it seems to the average citizen, lawmakers are preparing to decrease oversight of energy companies, despite the abysmal record of deregulation. Americans should let politicians know that they won't stand for more Enrons and more deregulation," said FTCR's senior consumer advocate Douglas Heller. "The Bush Administration pushed hard but failed to get the energy industry's deregulation plan through Congress this year. We expect the energy industry to come back again next year, but if there is going to be another energy bill it must be built on the lessons of Enron and California. Energy reform should aim to hold power companies more accountable and regulate the system more carefully not less."

The Bush energy policy, outlined in the 2001 National Energy Plan and developed by Vice President Cheney after secret meetings with Enron officials, seeks to expand "market-based rates" for electricity through an increased dependence on the wholesale energy markets and the energy trading business. This is the same scheme that allowed power companies to overcharge Californians by billions of dollars during the energy crisis of 2000 and 2001. In January, FTCR issued a 58-page report entitled HOAX: How Deregulation Let the Power Industry Steal $71 Billion From California documenting the devastation caused to consumers and taxpayers when the state of California deferred to the Federal Energy Regulatory Commission's (FERC) "market-based rates" system. FTCR's Hoax report is available at http://www.consumerwatchdog.org.

The administration and energy companies also hope to decrease states' regulatory control of the electricity transmission system, also known as the grid. This proposal, which was aggressively advocated by Enron CEO Ken Lay, would allow power companies to use Enron-style market manipulation to easily move energy out of its state of origin in order to create manufactured shortages in certain areas of the country to increase power prices, as was done during the California deregulation debacle.

At the heart of the Bush energy proposal will be a repeal of the Public Utilities Holding Company Act of 1935 (PUHCA), which protects the public against the dangers of unregulated utilities. A repeal of PUHCA would open the door for the consolidation of power companies, leaving regulators virtually powerless to stop market abuses. After gaining an exemption from PUHCA in 1994, Enron was able to dominate power markets virtually unchecked. Instead of strong barriers to anti-competitive behavior and high-risk gambles by energy companies, the Bush plan relies on the alleged efficiency of the unregulated marketplace and the honesty of big energy corporations, both of which have proven indefensible in recent years.

"Consumers across the nation will face a California-style disaster if power companies are allowed to charge unregulated prices for electricity. Electricity is too vital to the public safety and economy to leave in the hands of unregulated power companies, as President Bush has proposed. The American people know that our energy system must be carefully regulated, and President Bush and the Congress must set out to protect consumers ahead of the energy companies," said Heller.

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