SURVEY FINDS ECONOMISTS OPPOSE ELECTRIC UTILITY COMPANY EFFORTS TO RECOVER ‘STRANDED COSTS’

Harrisburg, PA — A statewide survey of 110 economists, primarily employed in academia, has found widespread opposition to attempts by utility companies to recover so-called “stranded costs,” or the loss of value of their investments, as Pennsylvania moves forward with consumer choice in the electric utility industry.

The survey of economists, conducted in March by the Lincoln Institute of Public Opinion Research, Inc. found 64% opposed to permitting utility companies to recover the loss in value of their investments, while 19% said such recovery should be allowed and 17% expressed no opinion.

Economists were less certain that customer choice would be a benefit to consumers. Forty-four percent agreed that the deregulation of electric utilities, permitting retail choice for residential and commercial users, will end up being a substantial benefit to consumers. Thirty-six percent said customer choice would not be beneficial and 20% said it is too early to tell.

In another survey, the Lincoln Institute asked the chief executive officers of Pennsylvania’s major employers (125 or more Pennsylvania-based employees) what effect they felt the deregulation of the electricity market in Pennsylvania would have on their business over the next five years.

Sixty-six percent of the CEOs who responded to the survey said deregulation of the electric utility industry would have a positive effect on their business, while only 6% predicted negative consequences from deregulation. Another 28% expected deregulation to have no significant effect.

The effects of deregulation, however, have not yet begun to be felt by most companies. Seventy-nine percent of the corporate leaders said deregulation has had “no significant effect” to date, while 16% say deregulation has had a positive impact on their business and 5% have felt a negative impact from deregulation.

Complete results of the Lincoln Institute’s survey of Pennsylvania economists, and the Spring 1998 Keystone Business Climate Survey are available on the worldwide web at www.lincolninstitute.org.