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CEEDNews May 1997

Volume V, No. 5


Information Overload:

An Analysis of the Proposed Information Disclosure Statements

By Suzanne Daycock
As the restructuring of the electric utility industry gains momentum across the country, opponents of coal-fired generation continue to develop new approaches aimed at reducing the percentage of coal-fired generation within the overall generating resource mix. Many of these approaches have been presented in previous editions of CEEDNews, including schemes such as "old source" performance standards or requirements that retail electric suppliers provide customers with a minimum amount of renewable energy as a portion of its resource mix. In recent months, however, another approach has begun to gain national attention and support, particularly in areas of the country not compliant with air quality standards.

Under the banner of the National Council on Competition in the Electric Industry, an ad hoc group of organizations and government agencies have initiated a project to develop "product content" labeling standards. The label would provide price, fuel and emissions information relative to the power being delivered by retail suppliers to its customers. The goal of this research project is to develop a uniform, market-based product label "to promote effective consumer choice and to preserve renewable resources, resource diversity and environmental protection". Labeling advocates hope that, by providing customers with the price and environmental characteristics of a particular power supplier's resource portfolio, customers will reject suppliers whose portfolios include high percentages of coal or nuclear generation in favor of those that promote renewable and low-emissions resources.

Although power marketers and fossil-fuel generators are doubtful this scheme will produce meaningful results, the project is well into the implementation phase and is currently backed by an influential audience of "labeling hopefuls". Organizations sponsoring this approach include the National Association of Regulatory Utility Commissioners (NARUC) and a federal inter-agency task force coordinated by the U.S. Department of Energy, including representatives from the Energy Information Administration, the Environmental Protection Agency, the Federal Energy Regulatory Commission, the Federal Trade Commission, and the Food and Drug Administration. In fact, the genesis of much of the current attention to this strategy is due to a resolution adopted by NARUC at its November 1996 meetings.

The NARUC resolution urges states adopting retail competition to include enforceable standards of disclosure and labeling allowing retail consumers to easily compare the price, price variability, resource mix and environmental characteristics of their electricity purchases. Since the adoption of the resolution in New Hampshire, Massachusetts, Vermont, Rhode Island and New Jersey called for information disclosure statements other states have followed suit. Given the broad interest shown by New England regulators in retail competition and in the proposed labeling scheme, the National Council has chosen New England for an information disclosure pilot project to test labeling information approaches with customer groups when retail competition is implemented in early 1998.

Until recently, suppliers had little opportunity to provide input on the labeling approach advocated by consultants to the National Council. Most suppliers contend that they were largely unaware of activities in this regard. However, during state regulatory proceedings in New England, suppliers can voice their concerns about this approach.

In a recent letter to Commissioner Besser of the Massachusetts Department of Public Utilities (DPU)—who is the designated contact for the regional PUCs for the pilot project—a group of the wholesale energy suppliers, distribution companies, power marketers, independent power producers and the region's leading environmental organization raised concerns that there has been no in-depth examination questioning what information would be useful to most consumers. Further, the group stated that there has been no open examination mechanisms to deliver such information to consumers, including an analysis of the costs and administrative burdens, as well as the benefits, that would be associated with various forms of meaningful disclosure.

The group of concerned suppliers advocated a more thorough process to compile information on: 1) environmentally-preferable goods, services and product offerings that may be offered in retail electricity markets and which have not yet been considered; 2) a scientifically-sound understanding of the potential consumer demand through targeted market research for any particular form of environmental disclosure for the variety of products that may be offered; 3) the meaningfulness of various disclosure schemes to the tracking and verification and enforcement of these schemes; and, 4) the relationship of any disclosure scheme to any "safe harbor" protection from enforcement actions under federal and state consumer protection laws.

CEED is actively participating in information disclosure working groups in New England, and inroads have been made already in New Hampshire. CEED is also a part of the supplier coalition working aggressively to convince New England regulators of the need to consider the above threshold issues prior to endorsing a specific pilot project to test product labels in New England. CEED members need to be aware of the National Council project and the possibility that this concept will be broached by environmental or utility regulators in other member states. Members who would like additional information on the national product labeling initiative are encouraged to contact CEED's North Region office.

Suzanne Daycock is President of Odyssey Strategies, Inc. in Mahwah, New Jersey and a consultant to CEED.


ELECTRIC UTILITY RESTRUCTURING

CONNECTICUT
The Connecticut legislature is considering a bill that would allow retail competition in that state. Controversy surrounding an environmental title resulted in the deletion of environmental requirements from the act. Instead, the legislature's environmental committees were encouraged to pursue their agenda under cover of a separate bill. The resulting bill would impose the most arduous conditions in the country on electric suppliers, requiring all electricity generated or purchased for sale to end-users meet a set of environmental standards established by the State of Connecticut. CEED has been monitoring the progress of this bill, which is rumored to likely die or undergo significant amendment due to the controversy surrounding it.

GEORGIA
The Georgia Pubic Service Commission held a public workshop on electric industry restructuring in Georgia. At this workshop, a representative of the Sacramento Municipal Utility District (SMUD) called for a fossil fuels tax specifically on coal so renewables, which he claimed are "nearly as cheap as coal," could increase generation. He asserted that most people were willing to pay more for clean fuels. CEED questioned the SMUD representative on numerous points. Georgians believe this was simply California's way of making the nation's electric rates more comparable to California rates. Subsequent workshops are scheduled in June and July. CEED will be present at all of these sessions to ensure that the coal's interests are represented. Contact the South Region office for further information.

MARYLAND
Maryland PSC staff has released a draft report of recommendations for restructuring the state's electric power industry to a select group of stakeholders for comments prior to its final release. CEED reviewed the draft and, although the report recommends retail competition, it does not currently impose environmental requirements or restrictions on the emerging market.

MASSACHUSETTS
CEED began lobbying in the Commonwealth on industry restructuring legislation. Representatives of CEED supplied key decision-makers within the state legislature with data underscoring the importance of coal-fired generation to New England's ability to meet regional economic development objectives. CEED's goal is to convince Massachusetts legislators to reject proposals by state environmental regulators and the Governor's office that would require all generators and retail power suppliers meet state-imposed environmental comparability standards.

NEW HAMPSHIRE
CEED participated in a Commission working group to develop recommendations for adopting a uniform environmental disclosure requirement for New Hampshire retail suppliers. CEED joined retail suppliers and generators in arguing that power sources and their associated emissions could not be tracked in any meaningful manner given the future structure of the regional electric market. Opponents further argued that attempts to impose such a requirement will generate unnecessary costs and significantly diminish competitors' interest in the state's retail markets. A report was prepared and submitted to the PUC by participating staff outlining this position and recommending that the PUC not adopt a mandatory disclosure system at this time.

In a related matter, members of the PUC working group have taken their arguments to a region-wide working group organized to implement a product labeling pilot project in New England (see page 1). CEED is participating in this stakeholder group to help to ensure that threshold issues having to do with cost, tracking viability, emissions complexities and other key issues are addressed before any labeling scheme is adopted for a pilot.

NEW JERSEY
The Board of Public Utilities has released its final report on restructuring the electric services industry in New Jersey. CEED has been an active participant in this energy master plan proceeding for nearly two years and, although the BPU continued to support positions advocated by CEED and presented in the draft report regarding the ineffectiveness of state-imposed environmental barriers on its marketplace, the BPU did add a recommendation that emissions disclosure labels be provided to customers by retail power suppliers. Further, the final report included a recommendation that an emissions portfolio standard be imposed on state retail suppliers should NOx emission reduction requirements not be adopted on a super-regional basis.

NEW MEXICO
The New Mexico Public Service Commission has ordered the creation of a work group to address the various issues regarding deregulation of the electric industry. Environmental concerns will be a major focus of the work group. CEED's West Region will participate in this process.

NEW YORK
The New York Public Service Commission (PSC) is hearing a series of cases on the phase-in of retail competition for all of the state's utilities. Several suggested settlements have been opposed on the basis that the proposals favor older coal plants, and provide insufficient funding for renewables.

The NRDC, Pace Energy Project, Sierra Club and fifteen other groups are attempting to impose the same requirements CEED has been battling in New England states for the last year. There is a consistent, well-organized effort to force implementation of new source performance standards on older plants, support renewables, and to require emission labeling and portfolio requirements. It was clear early in the process that the group intends to achieve victories in the more sympathetic New England states, then take the program to the coal-consuming states of Pennsylvania and New York, which has now occurred. CEED has already intervened in Pennsylvania proceedings, and will take appropriate steps in New York.

OKLAHOMA
The Oklahoma legislature passed an electric utility deregulation bill to adopt retail wheeling in 2002. While the bill does not contain any language that might bias the market against coal use, it does call for several studies between now and 2002, one of which will address "stranded benefits". The stranded benefits are defined as those programs currently in place at the Oklahoma Corporation Commission. CEED will participate in this interim study to prevent bias against coal.

PENNSYLVANIA
This week CEED filed petitions to intervene in the restructuring filings of Pennsylvania Power & Light and Pennsylvania Electric Company to ensure that coal interests under the newly enacted Electricity Generation Customers Choice and Competition Act are not undermined by parties to the proceedings. In particular, CEED is concerned about participation by anti-coal groups who failed to achieve their goals during the legislative debate on the new Act. We will continue to monitor these restructuring proceedings and present testimony, if necessary.

TEXAS
A lobbying and public relations effort is underway in Texas to ensure coal-fired generation in the largest coal consuming state is not adversely impacted by restructuring. Editorials on The Myth of the Dirty Power Plant have run in numerous Texas newspapers. In the articles, CEED dispels the notion that restructuring will harm the environment. Additionally, CEED and its members have visited editorial boards in Houston, San Antonio, Victoria, and Fort Worth, as well as the capitol bureaus of all major newspapers. The restructuring bill, as of print time, will not likely pass in this session.

VERMONT
The Vermont legislature will adjourn without passing an industry restructuring bill. The proposed bill would have imposed renewable and emission portfolio standards on the state's retail electric suppliers and required emissions disclosure labeling. CEED will continue to work with other industry stakeholders on this issue and will monitor the progress of any bill that is reintroduced when the legislative session begins in January.


STATE REPORTS

COLORADO
Legislative: After a troublesome beginning, the 1997 Colorado legislature concluded with several bills sent to Governor Romer that will benefit coal-fired generation. Specifically, one bill creates legislative oversight of the Colorado Air Director's participation in any multi-state air quality organizations (see WRAP report). Another bill calls for an interim legislative committee to determine a measurable visibility standard for Class I areas in the state. Since coal emissions are a major target of visibility protection advocates, CEED will be active with this committee.

LOUISIANA
Siting Bill: Legislation to prohibit future facilities siting in the state passed a Louisiana House Committee, but was not passed by the full House. The bill required an Environmental Impact Statement (EIS) that with vastly expanded research and analysis, including a list of:

  1. all pollutants that may be generated;
  2. annual quantities allowed;
  3. adverse health effects;
  4. an analysis of residents at risk within two miles of the facility;
  5. analysis of risks to residents within five miles in worst-case accidental release;
  6. a map showing environmentally sensitive areas and how the facility could affect them; and,
  7. a list of any schools, day care, hospitals, etc. within two miles and how the facility may affect them.
Upon completion of the proposed EIS public hearings would take place. CEED worked with the Louisiana Association of Business and Industry in opposition to this legislation.

MINNESOTA
Plant Siting: Opponents of the University of Minnesota's proposed renovated steam plant for the Minneapolis campus have reportedly given up after four years of legislative attempts to kill the project. CEED has worked with the University throughout the battle to support continuation of the multi-fuel project.

NEW YORK
Energy Plan: During the first year of his administration, New York Governor Pataki advanced legislation to abolish the Energy office, and created the Energy Research Development Authority. Recently, the Board announced it would update the state's 1994 Energy Plan. A draft is currently being developed and it may be reviewed as early as this summer. CEED will participate in the process to ensure that coal's message is heard.

OHIO
Meeting: CEED facilitated a meeting of Ohio members from the coal, rail and utility sectors to review issues affecting Ohio directly, as well as several proposed regional legislative, regulatory and litigation matters. Seventeen CEED members spent several hours in open, informative discussions to help direct CEED's current and future activities. As a result of the discussions, CEED has already provided the Ohio PUC with information concerning coal's role in a restructured energy market. CEED wishes to thank all of our members who took the time to meet in Columbus.

PENNSYLVANIA
Legislative: HB 1229, which prohibits a Governor or their designee from serving on, or expending any funds for the Ozone Transport Commission (OTC), was referred to the Committee on Environmental Resources and Energy. This is the first legislation of its type pursued in any of the Ozone Transport states, and could create an interesting situation as the OTC proceeds to develop implementation of the Phase III 75% default provision.

TEXAS
Environmental Education: CEED presented coal educational materials to nearly 100 teachers from across Texas at a business and state agency sponsored Environmental Education Conference. A Question of Balance was the theme of the conference, which drew visible protest from groups opposing fossil fuel use. Its time teachers learn the truth about the strides Texas business is making in cleaning our environment. The conference ended with a meeting between program participants and state school board officials on proposed changes to text books.

Coal Use Tax: CEED reported last month on a tax unfairly aimed at coal use in Texas. The legislation, which started as a stand-alone bill, was combined into the massive school funding/property tax relief bill pushed by the Governor. The bill, which calls for a 7.5% sales tax on all coal and lignite, was changed in committee to include all transportation costs. The bill was then amended on the floor of the House to remove lignite from the tax. This still leaves a tax on bituminous coal used in Texas, of which over 99% is mined out of state. The lignite amendment had two beneficial consequences: it lowered the revenues to $95 million annually and it made the bill more susceptible to constitutional arguments. The Senate submitted its own school funding/property relief bill, which does not include a coal tax. This bill has passed the Senate and the two versions are being debated by a Conference Committee. CEED has worked diligently to mobilize coal stakeholders in the state to oppose the tax. Over 40 companies, associations, and unions have joined with CEED to work in united opposition to the tax. If your company has at stake in this issue, we ask that you contact CEED's South Region office.


OTAG

ALABAMA
The Alabama legislature passed comprehensive legislation on EPA's proposed Ozone Transport Assessment Group (OTAG) State Implementation Plan (SIP) calls. The bill requires legislative review and oversight on any ozone SIP response by the Alabama Department of Environmental Management. The Senate and House Commerce, Transportation, and Utilities Committees will make recommendations to the Joint Committee on Administrative Review regarding the action it should take while studying the revision to the plan. Alabama has proven through modeling that it does not cause air pollution problems in the northeastern states. This bill, which was recently signed by Governor James, will assure that legislative review and cost/benefit analysis is performed before Alabama responds to EPA. We recommend the excellent work by the United Mine Workers of America in support of this legislation. CEED will continue efforts to pass the OTAG SIP legislation in key states.

MISSOURI
HCR 12, a resolution based on CEED's model legislation, has cleared both houses of the legislature, becoming law without the governor's signature. CEED salutes the Missouri Oil Council/API and its allies for their efforts and leadership in passing the resolution.


TVA

CEED filed comments last week on the Environmental Impact Statement (EIS) for TVA's Bellefonte Conversion Project. CEED believes TVA should select the resource alternative based on availability and lowest cost power over the life of the plant. Although the project will not cause an environmental impact under any of the resource alternatives, CEED is concerned that the draft EIS may underestimate the environmental emissions from the 2,406 MW natural gas alternative. Compressor station emissions should be included in evaluations of the environmental impact of this resource alternative.

CEED also contested several other provisions of the EIS including:

  • implication that the aesthetics and recreational impacts of the coal-based alternatives were rated as an important permanent negative;
  • surface water quality impact of the coal was rated as a negative environmental impact; and
  • aquatic ecology impacts for the coal-based alternatives were given a modest permanent negative rating based on the potential impact of raw material spills and wastewater discharges.

WRAP

The successor body to the Grand Canyon Visibility Transport Commission (GCVTC) is the new Western Regional Air Partnership (WRAP). While CEED was fully engaged in the GCVTC process, we never had an official voice or ‘seat at the table'. Thanks in large part to a proactive new Colorado Air Quality Director and political support from CEED member companies, CEED has been chosen as one of four industry representatives to participate in the two committees recently created by the WRAP.

The state Air Quality Directors believe the EPA will require states to join multi-state organizations like OTAG to address the new PM2.5 Ozone and Regional Haze regulations expected to be issued this summer. The western states hope WRAP will be designed better than the EPA will mandate. CEED will continue to focus on full participation to ensure coals perspective is accurately characterized.


Welcome New Members!


Joy Mining			Board Member

Northern States Power		Board Member

Electro-motive Div. of GM	Contributing Member

Savage Industries		Contributing Member

 

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