Announced Actions for August 18, 1999

The Federal Trade Commission today announced the following actions.

Advocacy/comments filed by FTC staff or the Commission: The Commission has authorized the filing of staff comments regarding the following items: 1) the National Association of Attorneys General (NAAG) Draft Environmental Marketing Guidelines for Electricity; and 2) the Federal Energy Regulatory Commission's (FERC) Proposals Regarding Regional Transmission Organizations (RTOs).

Comment to the National Association of Attorneys General (NAAG) Regarding Draft Environmental Marketing Guidelines for Electricity

The FTC has a longstanding interest in the regulation of, and competition in, energy markets. It actively monitors industry and legislative developments in the electric industry at the state and federal levels. The Bureau of Consumer Protection submitted this comment to NAAG's Energy Deregulation Working Group on its Draft Environmental Marketing Guidelines for Electricity.

While the staff continues to support the Draft Guidelines' use of the FTC's Guides for the Use of Environmental Marketing Claims, 16 C.F.R. Part 260, as the starting point for developing guidelines tailored to electricity, improvements were suggested in six general areas. In summary, the staff comment observed that:

1. Research to date suggests that consumers would not benefit from a proposed required disclosure in advertisements about the use of a "tagging" system;
   
   
2. Caution should be exercised in the Draft Guidelines when requiring companies to disclose the environmental effects of their power on a "life cycle" basis;
   
   
3. The proposed requirement that all environmental claims disclose the impact of other types of environmental harm appears too restrictive and may chill advertising claims that would otherwise provide useful information to consumers' purchasing decisions;
   
   
4. It would be premature to state definitively in the Draft Guidelines that the term "clean" connotes a claim of general environmental benefit and also premature to impose a burden of substantiating all environmental benefits whenever the term "clean" is used;
   
   
5. Further consideration should be given within the Draft Guidelines to the issue of allowable tolerances between claimed and actual content of power supply portfolios; and
   
   
6. Other general FTC guidance and principles concerning substantiation and endorsements may be appropriately incorporated into the draft guidelines.
   
   The vote to authorize the filing of staff comments was 4-0.

FTC Staff Comments on the Regional Transmission Organization (RTO) Proposals of the Federal Energy Regulatory Commission (FERC)

The FTC Bureau of Economics has agreed with the FERC proposal on establishing RTOs on a nationwide basis. The comment shared FERC's concern that vertical discrimination in transmission access has not been sufficiently curtailed by the behavioral rule approach adopted by FERC in its open access Orders Nos. 888 and 889. The comment cautions that "the reform process will be significantly hampered unless the ultimate consumers are provided accurate price signals ... [through] conversion to real-time metering."

Among the specific characteristics and functions enumerated by FERC, the comment emphasizes the need for large, independent RTOs. It recommended that FERC add an "efficient operations" characteristic to its proposed list of minimum acceptable characteristics and functions for RTOs that enhance competition in wholesale electric power markets. The Commission also identifies efficient operations as a major challenge for the independent system operators (ISO) form of RTO and points to unbiased decisions on transmission expansions as a major challenge for the Transco form of RTO. Finally, the comment advises FERC that an economic efficiency framework may be appropriate if it wishes to consider providing incentives to form RTOs. The vote to authorize the filing of staff comments was 4 to 0.

Amended complaints: In the case of FTC & Wisconsin v. First Impressions, Inc., doing business as Air-Land-Sea Reservations, Inc., the Commission voted to approve the addition of E. Gene Paige and James Burns as defendants. Paige is Air-Land-Sea's chief executive officer and Burns is the company's senior vice president.

The Commission vote to amend the complaint was 4-0 (see news release dated August 3, 1999; FTC File No. S046438-42; media contact is Mitchell J. Katz, 202-326-2161).

Copies of the documents mentioned in this FYI 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; 877-FTC-HELP; 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. V990011; V990012; S046438-42)