Build New Generation The Right Way
Customers First! Coalition has developed a Generation Action Plan
to provide reliable and affordable electricity by encouraging the
construction of new generation without the deregulation of existing
power plants, major changes to state law or ceding regulatory power
to Washington.
The Generation Action Plan does not involve eliminating state regulation
of power plants, as do the Wisconsin Electric Power Company and
Wisconsin Public Service Corporation proposals to give away their
power plants to non-utility subsidiaries ("GenCos") of
their parent holding companies. Deregulation is not the solution.
The Problem
- Wisconsin needs more electric generation capacity.
- Wisconsin utilities have a legal obligation to serve their customers,
but are reluctant to build new generation.
The Wrong Approach: GenCo Proposals = Deregulation
- Wisconsin Energy Corporation and WPS Resources (parent companies
of WEPCO and WPS) propose to transfer existing power plants to
a non-utility GenCo before building any new generation--by definition,
this is deregulation.
- Sale of power from the new GenCos back to the utilities would
be at wholesale and regulated by federal regulators (FERC), not
the state Public Service Commission (PSC).
- The PSC would lose its authority to require cost-based prices
and to impose service standards. Once transferred, the Wisconsin
plants could be sold to out-of-state companies or the GenCo itself
could be sold, without any state approvals.
Chaos in California
- The California deregulation plan, like the GenCo proposals,
transferred power plants from the regulated utilities to unregulated
companies and shifted regulatory power to Washington, leaving
the state powerless to protect customers.
- This year California experienced the effects of that deregulation--sky-high
prices and a consistent threat of rolling blackouts.
Real Competition
- Ownership of generation capacity in Wisconsin is already highly
concentrated.
- Without appropriate regulation, large generators in Wisconsin
would have both the incentive and the means to manipulate the
electricity market, as they have done in California.
- Once existing generation is deregulated, the PSC would lose
the tools it needs to fix the market power problem in Wisconsin.
If this happens, the state may never have a functional free market
for electricity, leaving customers with the worst of both worlds:
without state regulatory protection from high prices and inevitable
shortages and without effective competition.
The Right Solution for Wisconsin: the CFC Generation Action Plan.
- The CFC Generation Action Plan benefits customers and will promote
the construction of needed power plants promptly, without deregulating
existing plants.
- Utilities could construct new power plants and receive revenues,
commensurate with the costs and risks they accept for the new
plants. These new plants would be regulated on a stand-alone basis.
Both new and existing plants would remain subject to state regulation,
with no transfer of jurisdiction to Washington, D.C.
- Utilities could earn a margin on purchased power when this benefits
customers. Appropriate incentives can be structured to reward
utilities for prudent purchases. This would facilitate the construction
of independent merchant plants in Wisconsin.
- Because no changes to existing state law are required, construction
can begin immediately after necessary PSC approvals.
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