Truesdell on Government: Utility deregulation meets opposition
Perhaps the future will be one in which large utility conglomerates control many aspects of American life, including providing the lion's share of service, repair and supply of goods. This future won't be here for a while yet, judging by the snail's pace with which the various utility deregulation proposals are moving through Congress.
Furthermore, this is an election year and small businesses such as contractors, who fear unfair competition from the power companies, and small regional utilities, who are afraid their customer bases will be eaten up by large megacorporations, have increased pressure to ensure their concerns are heard by politicians. Senate Majority Leader Trent Lott, R-Miss., reinforced this cautionary approach in a speech to the United States Chamber of Commerce, as reported in Public Power Weekly: "Don't expect Congress to pass electricity restructuring legislation this year. I don't think that the electricity deregulation legislation will reach the form that we can get it through the whole process."
The intensity of opposition is well-known to HVAC and plumbing wholesalers whose contractor customers have been waging fierce political fights across the country to protect their businesses from utilities. The number of states that have enacted utility competition legislation topped 24 this past year. Trade associations and the National Alliance for Fair Competition continue to press for federal language ensuring fair competition between utility affiliates and private sector firms. The whole idea of "deregulation" sounds appealing in this age of a successful, free-wheeling economy. People are attuned to the idea that freedom of companies to compete without restriction will lead to prosperity. But there is a large contingent of businesses asking if this rising tide will indeed lift all boats.
Current activity in Congress stems from the efforts to repeal the Public Utility Holding Company Act (PUHCA) which has allowed the Securities and Exchange Commission to regulate registered holding companies and their subsidiaries since 1935. The Act was designed to prevent holding companies from using taxpayers' utility rate payments to fund other activities such as foreign investments or to enter into business activities competing with small businesses. Today's consolidators are generally proponents of repeal because, of course, they are the targets of the act's intended regulation.
What does consolidation of economic power mean to small businesses? They are already buffeted by forces they often cannot control. Deregulation may determine who will have the leverage to control and limit them. If small regional utilities are terrified of the power of consolidators, what could be the potential steamroller effect on small contractors and wholesalers as their markets are disrupted?
Sponsors of the PUHCA repeal claim that removing unnecessary regulation and fostering competition in the utility market will benefit consumers through lower rates. However, repeal without protections would inevitably lead to anti-competitive practices such as the subsidization of service businesses and cost-shifting of assets.
Congress seems to be leaning toward a comprehensive approach to deregulation that would address a full range of concerns. The Clinton administration has not been keen on supporting Republican proposals, and various sections of the country have different agendas with both conservatives and liberals from these areas joining together to support the local viewpoint. For example, many northwestern states (where utility costs are extremely low) want to be exempt, fearing that rates might become based on a national market and their costs would rise. East Coasters are concerned about effects on coal pollution regulations.
When Newt Gingrich was speaker of the House, it appeared that deregulation was on a fast track. Some of the congressional leadership went on a fact-finding tour around the country, however, and were surprised by the conflicting points of view expressed. For now, things seem pretty well stalled out. There is a realization that holding companies can own anything. The strongest entities in a deregulated environment would be free to do whatever they want.
No one now is saying there should be no regulation at all. That would take all accountability out of the process. Current efforts seem to be haphazard at best, but a comprehensive approach to deregulation seems to be emerging. But this will take time, and it is unlikely to produce a bill during an election year.
The campaign, in fact, will allow this issue to be put on the table so that the public and the small businesses affected will have a chance to understand it and provide feedback to help shape the eventual package. This is as it should be. Wholesalers have a genuine stake in this fight along with their customers. They will surely want to be among the voices at the table.
Issues to watchThe OSHA ergonomics standard was the subject of hearings just completed. Many industry groups expressed their displeasure over the negative impact of the proposed rules, with warehousing businesses in particular sharing their concern that ergonomics programs would have to be established for each job. A furor arose when it was revealed that the government left out nearly 10 million workers in reporting the cost of proposed standard.
Driver hours of service regs are due soon. The Federal Motor Carrier Safety Administration will soon publish the rules which will likely include specific proposals for five classes of drivers. The rules are to establish maximum limits on how long commercial drivers can be at the wheel without a break.
A review of Article 7 of the Uniform Commercial Code has been recommended by the American Bar Association. The article addresses such issues as duties imposed on public warehouses, enforcement of the warehouseman's lien and issuance of warehouse receipts.
Health care reform remains a hot topic in Congress with business coalitions and some doctor's groups working to defeat a sweeping patient's rights proposal. It is feared that it would fuel cost rises or encourage employers not to offer health insurance.
HCFC production cap implemented. At recent meetings of the Montreal Protocol Group held in China, delegates agreed that developed countries should freeze production of HCFCs in 2004 at 1989 levels. Developing countries are to freeze levels in 2016 at 2015 baseline levels. No proposals were offered to put production controls on HFCs.
The EPA has been directed to conduct rulemaking on refrigeration cylinders. Congress asked the agency to address concerns that significant emissions of ozone-depleting and global-warming chemicals continue to be released into the atmosphere from the commercial use of disposable refrigerant cylinders.