For Your
Information:
Announced Actions for April 29, 2003
Commission
authorization to file comments with Georgia Public Service
Commission: The Commission
has authorized the staff of the Bureau of Economics and the
Office of General Counsel to file comments with the
Georgia Public Service Commission (GPSC) regarding
proposed standards to determine whether market forces constrain
retail prices for natural gas. The GPSC's
proposals respond to the Georgia Legislature's enactment of the
Natural Gas Consumers' Relief Act (the Act) that establishes a
rebuttable presumption that retail market conditions are not
competitive - and thus that retail prices are significantly
higher than they would be if they were constrained by market
forces - if more than 90 percent of consumers are served by
three or fewer marketers. The comments, which were filed in
response to a Notice of Proposed Rulemaking, are available as a
link to this press release on the Commission's Web site.
The GPSC proposes intervening
"as narrowly as possible" to limit retail natural gas price
increases if it finds that prices paid by a specific retail
customer delivery group are "not constrained by market forces"
and that prices are "significantly higher" than they would be if
not constrained by such forces. According to the FTC staff
comments, any such intervention should be "narrow and
short-lived," with a sunset review of any standards enacted once
the transition from a regulated to deregulated environment has
taken place.
The comment suggests that the
competitive implications of high concentration among firms (such
as the 90 percent level rebuttable presumption contained in the
Act) depend critically on other conditions in the market. The
comment noted that "the presumption that high concentration is
associated with market power is often rebutted by evidence that
entry is timely, likely, and sufficient or that anticompetitive
effects are unlikely for other reasons, such as the ability of
smaller incumbent suppliers to expand output quickly.
GPSC is considering a two-step
analysis that may trigger its temporary intervention in retail
natural gas markets. In the first phase, GPSC is proposing to
access whether prudent retail customers would be harmed by
suppliers' efforts to exercise market power. The FTC staff
suggests that in assessing the likelihood of significant market
power, the GPSC should consider not only market concentration,
but also the extent to which an anticompetitive price increase
would cause consumers to reduce their purchases from larger
incumbent natural gas firms, cause smaller sellers to expand,
and cause new sellers to enter the natural gas market. The
proposed "prudent customer" standard, therefore, should
accurately reflect retail customer behavior, the comments state.
In the second phase, the GPSC
would assess how actual prices compare to a competitive
benchmark. On this point, the staff comments suggest that if
GPSC has evidence of substantial, nontransitory market power in
retail natural gas markets, it should consider structural
remedies and, in particular, it may wish to review policies that
maintain supply bottlenecks by impeding entry of investments, as
well as customer access to pricing information and the costs of
switching providers.
The Commission vote authorizing
the staff to file the comments with the Public Service
Commission was 5-0. (File No. V030010; staff contact is Michael
Wroblewski, Office of the General Counsel, 202-326-2155.)
Commission approval of
final consent order:
Following a public comment period, the Commission has approved
the issuance of a final consent order in the matter concerning
Indiana Household Movers and Warehousemen, Inc.
and issued a response to the commenter of record. The Commission
vote to approve the final consent order was 5-0. (FTC File No.
021-0115; staff contact is Dana Abrahamsen, Bureau of
Competition, 202-326-2906; see press release dated
March 18, 2003.) |