FTC Testifies Before House Subcommittee on Consumer Protection Issues in Deregulated Electric Markets

The Federal Trade Commission today presented testimony to a U.S. House of Representatives Subcommittee concerning consumer protection in a deregulated electric power market. Today's presentation follows Commission testimony three weeks ago regarding the impact of market power and the importance of competition on the future of the electric power industry.

According to the testimony, which was delivered by Elaine D. Kolish, Associate Director for Enforcement, before the House Committee on Commerce's Subcommittee on Energy and Power, the Commission has been preparing for a deregulated electric power market by meeting with industry members and state regulators and by participating in conferences concerning electricity restructuring.

"Experience demonstrates that competition among market participants will ordinarily provide consumers with the benefits of low prices, good products, and great innovation," the testimony states. "In principle, these benefits should be provided in the electric power industry as a century of regulation gives way to competition. These benefits, however, will not be achieved without, among other things, vigilant consumer protection," Kolish said.

One of the Commission's first priorities has been to conduct business education. "Because a competitive market will rely on advertising and promotional activities, we are engaged in efforts to educate electric power providers about existing consumer protection laws that will apply to their business practices," Kolish pointed out.

The testimony outlines two areas of consumer protection that the agency will focus on. The first is policing electric services providers' advertising claims, particularly claims about the price and environmental attributes of the power being sold. The second is the policing of unfair or deceptive business practices such as slamming or cramming.

In conclusion, Kolish stated that the "Commission stands ready to meet both its consumer protection and competition enforcement responsibilities to protect consumer gains that should follow the introduction of market forces to the electric power industry."

The Commission vote to authorize the testimony was 4-0.

Copies of the testimony, as well as Commission staff statements on deregulation and competition in the electric power industry, are available from the FTC's web site at: http://www.ftc.gov and also from the FTC's Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580; 202-FTC-HELP (202-382-4357); TDD for the hearing impaired 1-866-653-4261. To find out the latest news as it is announced, call the FTC NewsPhone recording at 202-326-2710.

(FTC File No. 974234)