Indiana AFL-CIO 2000 Legislative Positions

Electric Utility Deregulation

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There continues to be a rapid movement toward legislatively mandated deregulation of the electric utility industry. This trend, combined with emerging international environmental commitments related to global climate change, threatens the hundreds of thousands of union jobs that depend on the stability of the electric utility industry, while shifting costs to smaller scale consumers. Claims of universal benefit, associated with fully open competition for electricity supply, are exaggerated and not well founded.

The U.S. electric utility industry employs, directly and indirectly, more than half a million workers and is a critical component of our national economy. An immediate transition to a deregulated industry will result in the write-off of billions of dollars of assets now on the utility companies books creating an enormous burden of standard costs for utilities, that will cause further pressure for unreasonable downsizing of work forces, thereby threatening safety and reliability of the nations electric supply system.

In addition to significant job loss in and around the industry, radical deregulation will cause an increase in electricity rates, particularly for residential consumers. Deregulation will also jeopardize the environmental progress achieved through energy efficiency, and demand side management programs, and reasonable diversity in primary fuel choice for power generation. Diversity of primary fuel and utilizing the nations most abundant resources, along with beneficial environmental technologies, has kept America the leader among global competitors.

The AFL-CIO encourages the legislature and state regulatory authorities to proceed cautiously on electric utility deregulation to ensure that deregulation efforts do not destabilize the industry, threaten workers jobs and dramatically increase residential electricity rates. We insist that at least the following five (5) items be included in any deregulation legislation:

1. That changes to the structure of the electric utility industry should be first proved to benefit all consumers before any such changes are implemented.
    
2. That, if customer choice rates are reduced and extended into one service territory from another service territory, then all customers in each class (industrial, commercial, and residential) in this service territory must have equal opportunity for those same reduced rates proportionate to their class; and
    
3.  That electrical service and customer service must remain reliable, safe and efficient and there must be assurances that there will be sufficient operating reserves for crisis situations. That the price of electricity in a competitive market must remain stable. All customers must be in the same class, and the quality of the power must remain high. That societal and community programs should not be abandoned as local government revenues decline due to utilities paying less tax. That universal access must be preserved, because electricity is a necessary service. That individual consumers and local communities should not be expected to bear the burden of making up for lost tax revenue.
    
4. That provisions must be made to protect the workers and shareholders of utilities who have invested in justifiable reliance on the current regulatory system which includes oversight by local communities. That mechanisms should be put in place to protect against the potential adverse effects on consumers and workers mergers and acquisitions which will result from new competitive pressures. That environmental protections and conservation programs must not be abandoned for the sake of enhanced profits and competitiveness. That public safety and worker safety must be maintained, as electric power companies cut staffing levels to enhance profitability.
    
5. That during the introduction of retail competition we protect all workers, including Indiana coal miners and other support industry workers, who are an intricate part of the Indiana electric utility power production system. That we must put mechanisms in place that does not allow for increased reliance on out of state coal in place of traditional Indiana coal markets as part of any deregulation plan. That continued usage of Indiana coal and Indiana coal miners and the jobs of all other support industry workers must be preserved.
    
6. That no legislation should ever be enacted that would cause Indiana to be dependent on other states for electricity - either through generation or distribution. Any deregulation law must contain language that would prevent reduction of generation or distribution capacity that currently exists throughout the state.
    
7. That prior to implementing any law to deregulate the Electric Utility Industry, the State Board of Tax Commissioners must study the impact of Electric Utility Deregulation on all taxpayers.  The state board shall then mail to ALL taxpayers, a copy of their findings and recommendations for changes in the state's various tax laws, rules and procedures of Indiana that would be necessary to replace any projected reduction in revenues as a result of the restructuring of electric utility companies.  These findings and recommendations contained in the Tax Commissioner's report mailed to ALL taxpayers must detail, in an understandable laymen's language, how the reduction in revenue to the state and local communities will be made up.  It should clearly state exactly which taxpayer would pay for such reduction in revenue.  It should point out how much the average residential and small business taxes will increase.  Additionally, the State Tax Commissioners shall not report on this issue to the General Assembly until the report to individual taxpayers is completed, and the taxpayers have had at least 120 days to reply to the Commissions findings.  The Tax Commissioners must take the taxpayers responses into consideration and include some in the final report they make to the General Assembly on this issue.