Report: the Progressive Caucus Position Paper:
Source: Progressive Caucus' Consumer Energy Rate Relief Act
The Problem
Escalating energy costs have almost no correlation with supply and demand. Adequate capacity to supply our current energy needs is and has always been plentiful within the energy markets. Newly formed deregulated energy companies are creating an artificial shortage and reaping tremendous profits while doing so.
The Progressive Caucus Solution: Wholesale Cost-based Pricing with Refunds
In the 1930s, wholesale electricity prices and wholesale natural gas prices were regulated, and the regulations provided for refunds if unjust or unreasonable rates were found. Since the late 1970s, these laws have been methodically dismantled leaving little federal price regulations to protect consumers. However, energy prices are easily manipulated as production and delivery systems are complex. Cost-based rates for wholesale electricity, natural gas, heating oil should be established to protect consumers from unjust and unfair prices. Cost based rates allow utilities to
recover the cost of their investment and operations while also allowing a reasonable profit. This is not a price cap— FERC sets prices based on a specific, professional rationale. Establishing cost-based rates ensure adequate supply is available and removes the profit incentive from shorting the market. The rates should be set retroactively to the beginning of 2000. Refunds will be issued to families and businesses who have racked up incredible debt in 2000 and 2001, paying the unreasonable and unjust charges that the energy producers, generators and wholesalers inflicted.
The Progressive Caucus advocates:
Implement wholesale cost-based pricing of electricity & natural gas to ensure consumers are not gouged. Require refunds when necessary.
Grant FERC new powers to regulate heating oil prices at the wholesale level. Cost-based pricing of heating oil will ensure consumers are protected from heating oil price spikes.
Topic: Energy & Oil
Headline: Regulate wholesale electricity & gas prices
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