Costa Intros Bill to Protect Consumers from Utility Hike
Washington, D.C.- Congressman Jim Costa joined Rep. Doug LaMalfa (R-CA) to introduce bipartisan legislation that would provide stability in energy prices for consumers. The Public Power Risk Management Act of 2013 would remove barriers that place municipal utilities, including irrigation districts such as Merced, Modesto, and Turlock Irrigation Districts, under restrictions that prevent them from taking responsible actions to hedge against price volatility in the energy market and to protect consumers from utility fee hikes.
“Our municipal utilities work hard to provide reliable, affordable energy to their customers,” said Costa. “This legislation will correct one of the unintended consequences of financial reform and give them the tools they need to protect families and businesses from energy price volatility. In a time when many families are struggling to make ends meet, they cannot afford a spike on their electric bill because Congress failed to fix this oversight.”
The legislation would increase the investment limit for non-financial entities that are affiliated with state or local governments to a level that would allow them to hedge against market volatility. The current limit is so low that it makes it virtually impossible for government-owned utilities to take routine actions to hedge against fuel and power price volatility.
As not-for-profit entities, these utilities are forced to pass along price increases due to market volatility directly to consumers. Costa’s bill would reverse an unintended consequence of the Dodd-Frank Wall Street Reform and Consumer Protection Act that has put small, municipal utilities at a competitive disadvantage by forcing them from the swaps market.