Sharp says economics still dictate electricity decontrol

Problems with electricity deregulation in some states should not deter or delay the effort nationwide, former US Rep. Phil Sharp said in Dallas Thursday. He said the US economy needs an innovative electricity market that can only come from decontrol.


Pat Crow
OGJ Online

DALLAS�Problems with electricity deregulation in some states should not deter or delay the effort nationwide, former US Rep. Phil Sharp said here Thursday.

Sharp, a lecturer at Harvard University�s Kennedy School of Government, worked on energy issues while a 10-term congressman from Indiana. A Democrat, he chaired the House Energy and Power Subcommittee for much of that time.

Sharp spoke at the North American Summit on Harmonizing Business Practices, sponsored by the US Energy Department and the National Association of Regulatory Utility Commissioners (NARUC).

Sharp said, �We�re on a huge learning curve on how to make a deregulated industry work. Last summer San Diego became the poster child for failed (electricity) deregulation.�

Sharp added that the effort cannot be abandoned now. �The economy needs innovation. Electricity is so central to our economy it must stay ahead of the innovation elsewhere.�

He also said the industry needs incentives that are unlikely through the regulated monopoly system, and electricity customers need lower prices.

�The real driver behind this movement was price, or sometimes price envy (for states with lower prices from deregulation).�

Sharp said, �Currently, the political drivers (behind decontrol) seem to be price volatility and reliability issues. But we have a lot of work to do in all parts of the market.�

He predicted Congress will not pass an electricity reform bill next session, but if it does, California�s experience with higher prices has ensured that, �One thing we won�t see from Congress is any kind of a mandate for retail competition.�

He said if higher oil and natural gas prices this winter prompt a legislative response next session, then it is possible that an electricity rider could be added to the bill.

Sharp said instead of legislative action, �My speculation is that the Federal Energy Regulatory Commission will play a larger and more assertive role in the next couple of years as it responds to crisis after crisis.�

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