A press conference was held by the NAFC to explain the threat of subsidized competition from monopoly utilities seeking to take over traditional small business markets.
Michael J. Kastner Sr., owner of Kastner Plumbing & Heating, Inc., West Friendship, MD, told Congress to “not turn their backs on small business” and urged them to pass legislation supporting fair competition in a deregulated market.
Kastner, also vice president of the Plumbing, Heating & Cooling Contractors (PHCC) National Association, added, “More and more often, small contractors like myself are forced to compete against a utility that finances its subsidiary company with money, personnel, and equipment paid for by the ratepayers.”
A statement issued by the NAFC said, “The advent of utility deregulation has dramatically spurred the entry of utilities into markets traditionally served by small businesses, many of which are family owned and operated.
“Utilities are using their state-sanctioned monopoly franchise in transmission and distribution of electric power to subsidize their entry into these markets. By passing costs to captive ratepayers, they are pricing private sector competitors out of business.”
More protection for smaller contractorsOne hvac contractor, citing a congressman’s utility restructuring bill, said the legislature needs to focus more on the small businesses who have lost market share over the past few years.
“Quite frankly, a small business such as mine and those we represent cannot compete very long in this environment,” said Bob Keingstein, president of the Air Conditioning Contractors of America (ACCA) and president of AFGO Technical Services, Woodside, NY.
“Ironically, because we’re also ratepayers, we’re contributing to the very funds the utilities are using to compete against us.”
Keingstein added that federal legislation must address market power abuses involving affiliate transactions. Specifically, it should provide:
- A definition of what constitutes cross-subsidization;
- Open access to the books and records of the utilities and their affiliates;
- An enforcement provision to help states regulate service-related affiliate activities; and
- A Right of Action so the issue can be resolved through the legal system.