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will prevent utilities from blaming future blackouts and brownouts on open access.

Advocates of mandatory open access claim, "The ISO will help get us beyond the 'yours

and mine' category to the 'ours' category."58 But it is precisely the notion of yours and

mine--property rights--that underlies incentives to invest and maintain customer service.

To the extent a third party, an ISO, can be plausibly scapegoated for any failures, reliabil-

ity may suffer, and innovation certainly will. Only the immediate feedback provided by

property rights in the grid can preserve pricing signals and eliminate the impulse to assume

or claim that reliability is someone else's problem. Precision price signaling and reliability

guarantees cannot be maintained under a regime the primary motive for which is ensuring

"nondiscriminatory" access. Houston summarizes the problem:

Regulation necessarily keeps private property rights in the transmission

grid weak at best, and this, in turn, causes a common pool resource prob-

lem that also must be addressed by regulators. Given the incentives for

overuse of common pool transmission assets and the disincentive of prop-

erty holders (with weak residual claims) to invest efficiently, the role of the

regulator expands in both operations and investment.59

The elimination of monopoly franchises rather than the use of mandatory access

will force utilities to compete to retain customers on the basis of their reliability and other

characteristics. Customers who wish to bypass utilities will make their own decisions

about the degree of reliability they prefer. Since utilities retain full property rights in their

own wires, those that choose to open their lines to avoid being undercut have every

incentive to ensure reliability or lose customers. New competitors, presumably, must

ensure reliability to attract customers, but reliability and interruptability will vary across

firms as will the prices they charge.

State vs. Federal Jurisdiction

Does the federal government possess the authority to order open access? Many

answer no. Edison Electric Institute president Thomas Kuhn, for example, told the

Electricity Daily that Rep. Dan Schaefer's (R-Colo.) restructuring bill was "a disappoint-

ment. The legislation runs roughshod over states already pursuing this issue."60 Citizens

for State Power and the Small Business Survival Committee oppose federal restructuring

legislation as well. In colorful full-page advertisements in many Washington-based

publications, including the Washington Times and the Weekly Standard, SBSC argues that

federal legislation would preempt dozens of state deregulatory initiatives; it also argues

that small businesses and consumers will face higher costs because retail deregulation will

favor large industrial customers.61

The belief that Washington should leave the states alone has merit, in general, but

the argument that "some states may even resist deregulation [because] that's what our