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Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit X-From: James D Steffes X-To: Steven J Kean, Mark Palmer, Karen Denne X-cc: X-bcc: X-Folder: \Steven_Kean_June2001_4\Notes Folders\Discussion threads X-Origin: KEAN-S X-FileName: skean.nsf 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 © 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 ______________________________________________________________________ To review or revise your folder, visit Dow Jones CustomClips or contact Dow Jones Customer Service by e-mail at custom.news@bis.dowjones.com or by phone at 800-369-7466. (Outside the U.S. and Canada, call 609-452-1511 or contact your local sales representative.) ______________________________________________________________________ Copyright © 2000 Dow Jones & Company, Inc. All Rights Reserved
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