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After two years of study by a state government task force, Kentucky's elected leaders remain cautious about the advisability of electric utility industry restructuring in Kentucky. This caution can be attributed to several factors. The three most prominent are:
Kentucky's low electric rates
Kentucky's electricity rates are some of the lowest in the nation. In fact, according to the most current data from the Energy Information Administration of the U.S. Department of Energy, Kentucky's average residential electric rates are the third-lowest in the country.
Disagreement about restructuring's potential benefits
There is disagreement among economists concerning the potential effects of restructuring in Kentucky. Professors in the University of Kentucky's College of Business and Economics concluded in a 1998 report that restructuring would significantly decrease electric rates in Kentucky. Later that year, professors at the University of Kentucky's College of Agriculture reached a contradictory conclusion, predicting that Kentucky's residential electric rates, particularly in rural areas, would be higher with restructuring.
Troubling results from other states
The experiences of many of the 24 states that have restructured their electric industries to allow for retail competition are troubling. In California, for example, restructured electricity markets have been accompanied by dramatically higher prices and potential blackouts that have made headlines around the world. Likewise, in Arkansas -- which passed restructuring legislation in 1999 -- the state public service commission has officially recommended to the state legislature that the start of electricity deregulation be delayed by at least 21 months to between October 2003 and October 2005.
The 2000 Kentucky General Assembly (state legislature) and Governor Paul Patton maintained their cautious approach to restructuring with the passage and signing of
Senate Joint Resolution 107. This resolution mandated the continuation of a joint study committee (originally established by the 1998 General Assembly) to review the restructuring issue. Composed of five House members, five Senate members, and ten officials of the executive branch of government, this Special Task Force on Electric Restructuring resumed its meetings in October of 2000. Its charge is to continue to work toward a better understanding of restructuring and to make recommendations to the governor and the General Assembly by November 15, 2001.
The following
individuals serve on the committee:
| Senators: |
| Ernie
Harris, Crestwood (R) -- Co-Chair |
| Charlie
Borders, Russell (R) |
| David
Boswell, Owensboro (D) |
| Marshall
Long, Shelbyville (D) |
| Elizabeth
Tori, Radcliff (R) |
|
| Representatives: |
| Larry
Clark, Louisville (D) -- Co-Chair |
| Stan
Cave, Lexington (R) |
| Jim
Gooch, Providence (D) |
| Marie
Rader, McKee (R) |
| Mike
Weaver, Elizabethtown (D) |
|
| Executive
Branch Officials: |
| -Co-Chair:
Jack
Conway, Deputy Secretary, Governor's Executive Cabinet |
| -Gen.
James Bickford, Secretary, Natural Resources &
Environmental Protection Cabinet |
| -John
Davies, Director, Division of Energy |
| -Bob
Gray, Executive Director, Office of Rate Intervention, Office
of the Attorney General |
| -Merle
Hackbart, Ph.D., Special Advisor to the Governor |
| -Mike
Haydon, Secretary, Revenue Cabinet |
| -Martin
Huelsmann, Chairman, Public Service Commission |
| -Jody
Lassiter, Commissioner, Department of Local Government |
| -Mary
Lassiter, Governor's Office of Policy and Management |
| -Gene
Strong, Secretary, Economic Development Cabinet |
Click
here to read more (including committee minutes) about the
Special Task Force on Electric Restructuring at the Kentucky
Legislative Research Commission's web site.
Click
here to download an Adobe Acrobat (pdf) version of the first
report of the Special Task Force on Electric Restructuring from the
Legislative Research Commission's web site.
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