BEECHER - NAWC

Water ComparedStructural ChangeTable 3-5Highlights of the Clinton Administration's ComprehensiveElectricity Competition Plan (March 1998)The Administration's plan. The Plan is built upon the principle that customers should be allowed to benefitfrom the ability to choose their own electricity supplier. It advances the legislative changes necessary toprovide customer choice, enhance competition, and diversity generation sources. Key components of theplan include:I. Retail Competition - Flexible Mandate. The flexible mandate would require that all consumers be ableto choose their electricity supplier by January I, 2003, but would permit States and unregulated utilities toopt-out of the competition mandate if they find that consumers would be better served by an alternativepolicy. This approach strikes a balance between the need to spur competition and the importance ofpreserving State flexibility and authority.I, 1.2. Environmental Provisions. Environmental Provisions --The plan includes a range of provisions toprotect the environment through cleaner air and reduced greenhouse gas emissions while saving consumersmoney. These include a $3 billion Public Benefits Fund, to support conservation and energy efficiencymeasures, research and development into clean and efficient technology, and deployment of renewableenergy technologies; a Renewable Portfolio Standard, to require that at least 5.5 percent of electricity salesbe generated from non-hydroelectric renewable sources, subject to a cost cap; trading authority for nitrogenoxide emissions to facilitate cost-effective, market driven pollution reductions; and consumer informationrequirements to ensure that consumers can choose to purchase power from cleaner sources. We estimatethat the plan will reduce greenhouse gas emissions by an estimated 25 million to 40 million metric tons in2010. The Administration will monitor emissions by coordinating data received from utilities by thevarious agencies and such data will be provided in annual reports to the President, and will worlc with theCongress to ensure that any unanticipated consequences are addressed quickly and in keeping with theAdministration's climate change policies.3. Stranded Cost Principle. We support the principle that utilities should be able to recover prudentlyincurred, legitimate, and verifiable retail stranded costs arising from the transition to competition if thesecosts cannot be mitigated. States would continue to determine stranded cost recovery under State law.4. Consumer Information. Uniform and easy to understand labeling similar to the Food and DrugAdministration's nutritional labeling system will ease customer choice and facilitate the sale ofenvironmentally responsible green power. The Department of Energy would develop a system forrequiring all electricity sellers to disclose the price and environmental attributes of their power supply.5. Strengthen Electric System Reliability. Reliability and competition can-- and must-- go hand in hand.To ensure reliability in the new market we propose to build upon the industry's tradition of self-regulationby requiring key market participants to join an organization which would establish reliability standards andenforce those standards subject to the oversight of the Federal Energy Regulatory Commission.6. Cost Savings for Consumers and the Government. The typical family of four is expected to save over$230 per year from this plan: $I 04 per year directly -- in lower electricity bills -- and another $128 per yearindirectly-- in lower costs for goods and services that use electricity. Federal, State and local governmentswill also save close to $2 billion per year.Source: White House Press Release, March 25, 1998.NAWC 72 September 1998