Not everything is bad in electricity competition.

Jim


---------------------- Forwarded by James D Steffes/HOU/EES on 08/17/2000 
03:08 PM ---------------------------
From: Margo Reyna@ENRON on 08/17/2000 11:26 AM
To: Richard Shapiro/HOU/EES@EES, James D Steffes/HOU/EES@EES
cc:  
Subject: Electric Restructuring: Despite bad name, restructuring benefiting 
some areas

I don't know if you have seen this article, but perhaps it can help provide 
some ammunition regarding the benefits of restructuring.
---------------------- Forwarded by Margo Reyna/NA/Enron on 08/17/2000 11:24 
AM ---------------------------


djcustomclips@djinteractive.com on 08/16/2000 11:13:51 AM
Please respond to nobody@mail1.djnr.com
To: 200144@mailman.enron.com
cc:  
Subject: Electric Restructuring: Despite bad name, restructuring benefiting 
some areas


Despite bad name, restructuring benefiting some areas 
  
08/14/2000 
The Energy Report 
(c) Copyright 2000 Pasha Publications, Inc. All Rights Reserved. 
The recent problems in San Diego and the media attention surrounding the 
power shortages and retail price spikes leads one to believe the problems are 
solely the result of restructuring efforts. However, some areas that have 
"deregulated" don't regret the decision.
Last week, Pennsylvania Gov. Tom Ridge said that electric competition will 
save consumers in his state $3 billion by 2001 and increase productivity, 
employment and personal income by 2004. His comments came as a response to a 
report recently issued by the state government. 
The report, prepared by the state Department of Revenue to measure the impact 
of restructuring on state finances, said that forecast reductions in retail 
electricity prices will improve the state's economy in several ways.
By 2004, as a direct result of electric competition, the report says:
** The real gross state product will be $1.9 billion, or 0.5%, higher than 
the baseline;
** Overall employment will increase by 0.5%, amounting to 36,400 full-time 
and part-time jobs, including more than 3,000 manufacturing jobs, nearly 
7,000 retail-sector jobs, more than 5,000 construction jobs, nearly 2,700 
transportation and public utility jobs, and more than 12,000 service-sector 
jobs;
** Nominal personal income will increase by $1.4 billion, or 0.3%;
** The price index will decrease by 0.47%; and,
** The population will increase by 51,400 persons, or 0.4%, as workers move 
to the state.
"Pennsylvania's national leadership in electric competition continues to 
bring dramatic savings and economic benefits to Pennsylvanians," Ridge said. 
"And, according to this new report, those savings and benefits will continue 
for some time to come. We expect electric competition will help create more 
than 36,000 jobs between 1998 and 2004, and have a major positive impact on 
our state's economy. And millions of Pennsylvania families and employers 
continue to save money on their electric bills - without even lifting a 
finger."
Savings from electric restructuring allow consumers more money to spend and 
invest, creating positive multiplier effects on the state economy, Secretary 
of Revenue Robert Judge said.
"Our research confirms that while consumers of electricity will realize rate 
reductions, there are many other benefits to Pennsylvania through electric 
competition," Judge said.
The Public Utility Commission estimates that consumers will save nearly $3 
billion by January 2001 due to electric competition.
The report includes an analysis of the effects of restructuring on sales tax 
and personal income tax revenue. The 1996 restructuring law required that 
deregulation bring no net effect on "immediate" state tax collections, the 
report says. Under the law, the Revenue Department must report to governor 
and the General Assembly providing information on tax revenues to enable 
lawmakers to judge the law's impact on the economy and to decide whether new 
laws are necessary to "maintain tax revenue neutrality during the transition 
period."
The revenue neutral reconciliation, the adjustment mechanism used to compare 
tax revenues collected before restructuring and after restructuring, is 
working as intended, the report says.
As required by the law, the Revenue Department will produce two more reports 
for the General Assembly and the Governor, one in August 2001 and one in 
August 2002.
Like Pennsylvania, some in Ontario say the movement toward a competitive 
market for electricity has saved customers upwards of $500 million through 
rate reductions.
Even though the Ontario Energy Board (OEB) is currently considering scaling 
back or stopping the move to competitive markets, one of the province's 
largest utilities, Toronto Hydro-Electric, says local regulators should 
recognize the savings from restructuring.
Toronto Hydro says the restructured market is successful because of the 
"utility's commitment to fair prices and safe reliable service in the new 
competitive electricity market." Since 1993, rates have fallen for all 
customer classes, the utility claims.
"We agree whole-heartedly with the need to protect consumers in the new 
electricity market," Toronto Hydro Vice President Blair Peberdy said. "As a 
municipal electric utility, we've protected consumers to the tune of more 
than $500 million through rate reduction strategies for the past seven years. 
Our rates are 12.5% below the consumer price index and we have reduced rates 
since 1993. That's why we're keen for the province to stay focused on 
introducing commercial reforms in the electricity distribution sector. We've 
invested millions in preparing for the opening of the new energy marketplace 
already and we're ready to go."
The utility warned against further forced rate reductions in light of the 
savings they have produced. Toronto Hydro also called for regulators not to 
lower prices at the expense of more reliable service.
"Considering the rate freezes and reductions that Toronto Hydro has 
implemented since 1993, price minimization should not outweigh other 
objectives in the OEB act," the testimony says. "Protect consumers not just 
in terms of rates, but also in terms of the quality of electric distribution 
services."
The company is also pushing for regulatory action to move along with 
competitive reform, not to delay the developing market already in a 
transition phase, because it might scare away new participants.
"The government has put a solid foundation in place for the new electricity 
market," Peberdy said. "Now is the time to look forward, not back. We're 
excited about the potential for new investment, new energy technologies and 
new business opportunities for Toronto Hydro, and we are prepared to work 
with the OEB to develop options that will help sustain the government's 
vision." 

Folder Name: Electric Restructuring 
Relevance Score on Scale of 100: 79

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