Electric Utility Deregulation

One cheer for Alexander Cockburn’s March 6 Column Left (“Utilities’ $500-Billion Power Play”) on the deregulation of the U.S. electric utility industry. He rightly points out that the debate is being driven by the “big industrial buyers” who stand to benefit most from a speedy transition to competition.

However, Cockburn misses the mark in his derisive treatment of stranded cost recovery. To begin with, nuclear plants are only one part of stranded costs. Other stranded costs, as much as $38 billion, are power-purchase contracts forced upon utilities by the ill-designed Public Utility Regulatory Policies Act. Moreover, Cockburn’s figure of $500 billion far exceeds the $90-$200 billion estimates now commonly accepted by those on both sides of the debate. In addition, putting all of our hopes in the “natural gas” fuel basket, as Cockburn advocates, may have him second-guessing that decision 10 years from now.

Quoting Martha Hewitt only compounds Cockburn’s misguided analysis. What she calls the “worst business decisions” were in fact investments approved by utility commissioners, based on the available fuel choices and economic growth projections they had in the 1970s. Where regulators determined that utilities made investments that went beyond their obligatory scope, those investments were disallowed and not recovered in rates--to the tune of $16 billion in the 1980s.

M. WILLIAM BRIER

Vice President, Communication

Edison Electric Institute

Washington