Isaac Baker

NEW YORK, Apr 1 2005 (IPS) — A group of lobbyists representing five leading energy companies is stepping up efforts to persuade the U.S. Congress to enact further industry deregulation before a key energy bill is introduced on Apr. 5.

But public interest groups argue that while deregulation brings higher corporate profits, it usually gouges consumers with price increases and makes it easier for companies to manipulate the market.

“We were appalled that these companies and these lobbyists were claiming to represent the interests of consumers,” Tyson Slocum, research director of the Washington-based consumer advocacy group Public Citizen’s energy division, told IPS.

“These companies are the poster child for corporate malfeasance, for ripping off consumers. They are in no place to tell consumers what’s best for them.”

The lobbying group, calling itself Compete, was formed by Exelon, Constellation Energy, Mirant, PSEG and Reliant Energy. The Washington-based lobbying firm Wexler & Walker is heading up the endeavor, and has hired a bipartisan group of expert lobbyists and retired government officials to tout wholesale electricity competition.

Compete says this would benefit consumers.

“We believe that deregulated, competitive electricity markets with well-structured market rules absolutely will serve the public interest,” Compete’s Chairman Don Nickles, a former U.S. senator from Oklahoma, told IPS.

However, Public Citizen notes that the five companies involved have histories of dubious business practices, including revolving doors between Congress and their lobbying firms, price-gouging, and attempting to defraud the government.

Collectively, the companies have paid nearly a billion dollars since 2001 to settle charges of what Public Citizen calls “Enron-style” market manipulation – abuses that were made easier to commit in deregulated markets, the group says. Mirant alone paid 780 million dollars, and Reliant Energy paid nearly 125 million.

Reliant Energy was also served with criminal indictments last year for allegedly hiking energy prices in California by temporarily shutting down its generators to create the illusion of a power shortage. The plan worked, according to the U.S. Justice Department indictment, and Reliant illegally raked in millions.

The records of these five companies, Public Citizen says, undermine their claims to be operating in the public interest.

The companies also have a history of making very large political contributions. Combined, they have given nearly four million dollars since 2001, with 64 percent going to Republican Party, which currently controls both houses of Congress. Some 76 percent of personal contributions from the group’s lobbyists have gone to Republicans.

About 15 of the 50 U.S. states have already deregulated their electricity markets. Originally, supporters of deregulation claimed increased competition in electricity markets would decrease costs to the consumer.

Nickles told IPS he believes energy deregulation “will match supply and demand at the lowest reasonable prices for consumers and will enhance reliability over the long term.”

This, however, has not always been the case.

“Electricity competition was sold on the basis that it would lower prices for all customers during all time periods for all uses,” says a statement by the Centre for the Advancement of Energy Markets, a pro-industry group.

“While it is certainly true that prices will change rather dramatically because of competitive electric policy, it is simply not true that all those price changes will be in the direction of high to low.”

Public Citizen says energy deregulation has not fulfilled its promise of lowering costs to consumers. Instead, in the 15 states with deregulated electricity markets, consumers are actually seeing prices rise at a faster rate.

“(Energy) deregulation has been a total failure,” Slocum told IPS. “We once had the best electricity system in the world that was a model in the planet. We no longer have it. That’s deregulation’s fault. That’s a disgrace.”

In recent months, deregulatory action has even been met with scepticism by various industry groups – and one extremely pro-market think tank.

The American Public Power Association, Electricity Consumers Resource Council, the National Rural Electric Cooperative Association and the Cato Institute have found fault with electricity deregulation.

Compete includes a powerful group of six lobbyists, some of whom have hold significant clout in Washington. The group includes Don Nickles; Robert S. Walker, former Pennsylvania Republican representative and one of the founders of Wexler & Walker; Jack Howard, former legislative assistant to Pres. George W. Bush and former aide to other Republican leaders; and William Massey, a Democrat and former commissioner of the Federal Energy Regulatory Commission.

Many of these lobbyists have developed extensive government contacts over the years. Opponents of deregulation worry they will have too powerful a voice in the deregulation debate.

“This is a classic revolving door scenario in Washington DC,” Slocum said. “These lobbyists are exploiting the government connections they’ve ‘earned’ while on the public payroll.”

Slocum says he hopes Congress will not further deregulate states’ energy markets as the energy bill is introduced next week.

“We would like to see Congress not pay attention to the campaign contributions it receives, but instead to look at the facts,” he told IPS. “Do a true policy analysis of what types of laws are going to actually help the vast majority of Americans.”