Electric Restructuring Not Good for All

Editor's Note:  The following is an excerpt from Governor Johanns' testimony on electric utility deregulation before the Senate Committee on Energy and Natural Resources in June.  The complete text of his remarks can be found at the Governors' Public Power Alliance web site at www.puplicpoweralliance.org   Governor Johanns and Tennessee Governor Sundquist serve as co-chairs of the Alliance.

"Before we rush headlong into yet another federal experiment in the deregulation of an essential public service, perhaps we ought to pause and take stock of the legacy of prior initiatives. First, let's recognize that the absence or reduction of regulation does not in itself necessarily increase competition. Without the proper market characteristics, competition will not develop and consumers may pay the price. We are finding this to have been the case in rural Nebraska.

"And surprisingly, in larger cities, too. In Council Bluffs, Iowa  population 54,000  the local investor-owned utility tried to open the electric market to other suppliers. Not a single utility  other than a subsidiary of the local utility   wanted to compete for customers in this test of competition in the electric industry in Iowa. Can we realistically expect electric industry competition when population density in some rural areas is less than two customers per mile of line? 

"Airline deregulation has resulted in a dramatic loss of air service in rural Nebraska with enplanements in our smaller cities down more than 56 percent since 1978, and two of those airports  Columbus and Sidney  now closed to commercial air service entirely. In the railroad industry, the story is much the same. Nearly 2,000 miles  roughly one-quarter of the active rail lines in Nebraska have been abandoned since 1982 and our vital agricultural industry, especially in remote parts of the state, is finding it ever more difficult and expensive to get products to market.

"As you know, when it comes to electricity Nebraska is unique. We have a longstanding tradition of enjoying the benefits of what we commonly refer to as public power   every single resident receives electric power from a municipality, public power district, or rural electric cooperative. No other state can make that claim. At the beginning of the century., Nebraska Senator George Norris, the father of the Tennessee Valley Authority, fought to create public power to give consumers local control, reliable, service and low rates. In the late 1960s, long before the Energy Policy Act of 1992 required deregulation of the wholesale electric industry, Nebraska had wholesale wheeling. Today that pioneering tradition continues, and Nebraskans are better off because of it." 

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