FTC Staff Files Comment With Louisiana Public Service Commission

The staff of the Federal Trade Commission on August 10 filed a comment with them Louisiana Public Service Commission (LPSC) about stranded costs and benefits arising from electric industry restructuring and competition in the provision of retail electric service.

The FTC has a longstanding interest in regulation and competition in energy markets, including proposals to reform regulation of the electric power and natural gas industries. And the staff has submitted numerous comments concerning these issues at both the federal and state levels.

In its comment, the staff addressed how unintended anticompetitive consequences could flow from certain systems of stranded cost recovery, if the LPSC decides to permit stranded cost recovery. Specifically, certain stranded cost recovery systems may create artificial incentives for incumbent, vertically integrated electric utilities to set prices to deter entry and harm competition. Staff identified three potential remedies to this threat to competition, including divestiture of generation capacity by incumbent utilities. In addition, the comment discussed potential distortions and inefficiencies that may accompany stranded cost recovery, and mitigation of stranded costs.

The Commission vote to approve the staff comment was 4-0.

NOTE: The comment represents the views of staff members of the FTC's Bureau of Economics and not necessarily the views of the Commission or any individual Commissioner.

Copies of the full text of the comment are available from the FTC's web site at http://www.ftc.gov and also from the FTC's Consumer Response Center, Room 130, 6th Street and 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.