FTC Files Comment with Maine Attorney General and State Public Utilities Commission

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For Release

The staff of the Federal Trade Commission filed a comment on May 29, 1998, with the Maine Department of the Attorney General and Public Utilities Commission regarding "The Interim Report on Market Power in Electricity."

The Interim Report identifies market power issues that may require legislative attention as Maine proceeds toward retail competition in electricity supply. The state agencies sought the FTC’s input in order to prepare the Final Report for the Maine Legislature due in December 1998.

The primary theme of the FTC’s comment is that the Department and Commission may wish to discuss additional aspects of entry in electricity generation markets. For example, the comment noted that entry in the form of new generation or transmission capacity may remedy market power problems and thus obviate the need for additional rate regulation. The comment stated that the FTC’s experience in analyzing the competitive implications of mergers and regulatory changes has shown that timely, likely, and sufficient entry may alter the competitive implications of market structure. The FTC’s staff recommended that the Department and Commission evaluate whether recent technological changes and prospective changes in the availability of natural gas may result in future entry conditions more favorable than envisioned in the Interim Report. The Department and Commission also may wish to suggest actions that the Legislature or the Commission (working with the New England Independent System Operator and the Federal Energy Regulatory Commission) could take to enhance ease of entry.

The staff comment also provides suggestions for specific clarifications and extensions of the Interim Report.

The Commission vote to approve the staff comment was 5-0.

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.

John C. Hilke
Denver Regional Office

(FTC File No. V980011)

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