Government’s Role in Energy Markets Should be Limited, Officials Stress

This posting was written by John Scorza, CCH Washington Correspondent.

While the government must encourage investment and innovation in the energy market, its role in the market is necessarily limited, said government officials speaking at an April 10 session of a Federal Trade Commission (FTC) conference on energy policy and competition.

FTC Chairman Deborah Platt Majoras stressed the need for competition in the energy markets and warned against intrusive government policies.

Ensuring Competition

In order to ensure consumer welfare, Majoras said, “[it] is our responsibility to stand up for markets and ensure competition.” Part of that effort involves advocating federal policies that “enhance consumers rather than raising barriers and preferring special interests,” she said.

In determining whether anticompetitive practices may be contributing to rising energy costs, Majoras said, the challenge for the FTC is to “distinguish between markets corrupted by anticompetitive conduct and markets that are functioning competitively, even when they’re producing results that we may not always like.”

Energy markets are “uniquely impacted by geopolitical considerations and federal and state government actions like regulation and taxation,” Majoras said, warning against government policies that could harm competition.

Similarly, Energy Secretary Samuel W. Bodman remarked that energy markets function most effectively “when they’re open, transparent, well-regulated and competitive.” And the role of governments in promoting those objectives is clear.

Efficiency Standards, Tax Incentives

Bodman cited energy efficiency standards and tax incentives for new technologies as government policies that have worked in the past.

In view of rising demands for energy, “[w]e must bet on technology,” Bodman said. “And we must signal to private investors that our policy environment supports sustained investment in renewable and alternative fuels.”

“The key to unlocking our energy future is ensuring that the innovation cycle continues at a rapid pace,” Bodman concluded.