Bal Harbour, Fla.
For over 65 years, the North American electric power system has been the safest, most reliable, and lowest-cost producer of electricity in the world. The post-Enron failure of emerging electricity markets confirms the AFL-CIO's long-held concern that electricity restructuring will destabilize the national power system, undermine supply reliability, and ultimately, dramatically increase prices. California's now notorious, botched deregulation experiment exemplifies the pitfalls of electricity restructuring and underlines the foolhardiness of trusting this most essential industry to risk-filled and flawed market mechanisms. The post-Enron era confirms that a strong governmental role is needed to guarantee an affordable and reliable power supply and to keep utilities solvent.
Over the past five years, the electric utility supply industry has been racked with bankruptcies, price volatility, and major lapses in reliability. We have witnessed major blackouts in the West as well as the costly 2003 Northeast blackout. The western electricity markets have been manipulated, and the consumers, businesses, and investors have paid a tremendous cost for failed deregulation schemes. Many states have stepped back from plans to open their electricity markets, and the AFL-CIO believes that the federal government should follow their lead and heed clear warnings.
The AFL-CIO Executive Council has previously expressed concerns about risks to consumers, workers, shareholders and communities associated with state and federal efforts to restructure the electric power industry (February 20, 1997, February 17, 1999, and February 15, 2001). Now a looming national energy crisis, precipitated by failed electricity commodity markets and deregulation schemes, compels the AFL-CIO to revisit this important issue.
The AFL-CIO urges that any legislation or regulation designed to address electricity supply be designed to accomplish the following:
- Strengthen and vigorously enforce—not repeal—the Public Utility Holding Company Act (PUHCA), which is a major bulwark, protecting consumers and investors against massive concentration and market abuse in electricity markets.
- Establish mandatory reliability standards and enforcement mechanisms to ensure the reliability of the nation’s electric power system.
- Guarantee states’ regulatory authority over the generation and delivery of electricity within their borders and the right to remain free from federal efforts to coerce them into joining regional wholesale electricity markets.
- Establish consumer protections in electricity markets with provisions that prohibit and punish market abuses and manipulations.
The AFL-CIO calls upon the Congress to enact a new electricity policy for the United States that will affirmatively meet the energy needs of all working families and address environmental concerns and the national economy.