Competition in Solar Energy Industry Availability of Publication and Request for Public Comment

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[6750-01] FEDERAL TRADE COMMISSION COMPETITION IN SOLAR ENERGY INDUSTRY Availability of Publication and Request for Public Comment AGENCY: Federal Trade Commission, ACTION: Notice of availability of pub­ lication and request for public com­ ment.

SUMMARY: The Federal Trade Com­ mission has available for distribution copies of “The Solar Market,” a record of the proceedings of the Solar Energy Symposium sponsored by the Commis­ sion in December 1977, and is request­ ing public comment thereon from con­ sumers, industry members, Govern­ ment agencies, and any other interest­ ed persons. The information thus ob­ tained will be reviewed by the Com­ mission staff in connection with its on­ going consideration and preparation of recommendations for Commission policy.

DATES: Comments must be received on or before October 20, 1978, in order to be included in this phase of staff consideration.

ADDRESS: Comments may be sent to Director, Bureau of Competition, Fed­ eral Trade Commission, Washington, D.C. 20580, Re: Solar Market Com­ ments.

FOR FURTHER INFORMATION CONTACT:

Marilyn J. Holmes, Bureau of Com­ petition, Federal Trade Commission, Washington, D.C. 20580, 202-523- 3696.

SUPPLEMENTARY INFORMATION: In December 1977 the Bureau of Com­ petition of the Federal Trade Commis­ sion sponsored a Solar Energy Sympo­ sium to examine issues relating to competition and consumers in the de­ veloping solar market. The record of the proceedings of that conference has been published in a 300-page book en­ titled “The Solar Market: Proceedings of the Symposium on Competition in the Solar Energy Industry.” A limited number of copies of “The Solar Market” are available free of charge from the Federal Trade Commission Distribution Branch, Room 128, Main Building, Washington, D.C. 20580, telephone 202-523-3067. Copies are also available from the Superintend­ ent of Documents, U.S. Government Printing Office, Washington, D.C. 20402, telephone 202-783-3238, for a fee of $5.25 (document No. 018-000- 00216-7).

. To assist the Federal Trade Commis­ sion in identifying the areas of poten­ tial competitive concern and in imple­ menting the best course of action with respect to the developing solar indus- FEDERAL REGISTER, VOL. 43, NO. 156— FRIDAY, AUGUST 11, 1978

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35748 NOTICES try, public comment is requested. The Commission invites interested persons to address an issues of fact, law or policy relating to (1) the issues raised and opinions expressed in the papers and commentaries contained in “The Solar Market,” (2) the need for a Fed­ eral Trade Commission role in the solar industry, and (3) any other com­ petitive and consumer concerns in this area.

While interested persons are invited to address any relevant issues, com­ ments are specifically requested on the topics set out below. In consider­ ing these issues, please note that the term "solar industry” is intended to refer to all appropriate solar technol­ ogies, including solar hot water, space heating and cooling, photovoltaics, ag­ ricultural and industrial process heat, solar-thermal, wind energy, oceanthermal, and biomass. Because certain issues may vary with the technology, it is important to distinguish between them and to specify which technol­ ogies are being addressed in each in­ stance.

Comments should take into consid­ eration the range of private and gov­ ernmental activities in the solar indus­ try, including research, development and demonstrations, standards devel­ opment and testing, manufacturing, sales, distribution, leasing, installation, servicing, and financing. Specific ex­ amples of factual accounts illustrating your comments, and discussion of issues or concerns that are unique to solar energy, are encouraged. To ensure prompt consideration, all comments should be clearly identified as “Solar Market Comments.” All ma­ terials received will be available for public inspection.

Questions L Industry Participants (a) Can utilities offer any services or bene­ fits in marketing, installing, financing, or servicing solar equipment that other nonuti­ lity companies are unable to provide as well or as inexpensively? if so, explain. (b) Are utilities that enter the solar indus­ try likely to enjoy a significant competitive advantage over nonutility companies en­ gaged in any competing activities in the solar industry? If so, what types of utilities, and what conditions, acts, or practices would lead to such an advantage? What unique economic efficiencies, if any, would utilities entering the solar industry enjoy? (c) Is there any significant difference, in terms of competitive impact, between madatory utility involvement in one or more phases of the solar industry and widespread voluntary utility participation in the solar industry? If so, explain.

(d) Is there a need for any restrictions on the entry or conduct of utilities in any area of the solar industry in order to preserve competition in such areas? What sorts of re­ strictions could be imposed? Would such re­ strictions have any adverse competitive ef­ fects? (e) What types of utility rate structures would provide the greatest incentives and the greatest disincentives for consumers to use solar equipment? For businesses to enter the solar manufacturing, sales, leas­ ing, installation, or service markets? What factors might lead utilities to implement rate structures that discriminate in favor of or against users of solar equipment? (f) Can large energy companies offer any services or benefits in connection with their activities in any phase of the solar industry that other companies are unable to provide as well or as inexpensively? If so, explain. (g) Are large energy companies that enter the solar industry likely to enjoy a signifi­ cant competitive advantage over smaller firms or nonenergy companies engaged in any competing activities in the solar indus­ try? If so, what conditions, acts or practices would lead to such an advantage? What unique economic efficiencies would large energy companies entering the solar indus­ try enjoy? (h) Is there a need for any restrictions on the entry or conduct of large energy compa­ nies in an area of the solar industry hi order to preserve competition in such areas? What sorts of restrictions could be imposed? Would such restrictions have any adverse competitive effects? (i) Is there basis for concern, in theory or in practice, that large energy companies might suppress or delay widespread com­ mercialization of solar technology? That other companies might do so? If so, how could such results be accomplished? 2. Industry Structure (a) Is there anything unique about the solar industry which suggests that different standard of antitrust enforcement, either stricter or more relaxed, should be applied to horizontal, vertical or conglomerate mergers, acquisitions, or joint ventures? If so, why, and what sorts of standards are rec­ ommended? What would be the likely com­ petitive effects of such different standards? (b) What economies of scale exist in the various solar industries? How are they likely to change in the near- and long-term future? Are there any solar technologies in which economies of scale are likely to lead to a situation of natural monopoly or oli­ gopoly? (c) Is there a basis for concern that the various solar industries will become increas­ ingly concentrated in the near- or long-term future? If so, what facts and circumstances make such concentration likely? (d) Is there a basis for concern, in theory or in practice, that concentrated ownership of natural resources or patents, or posses­ sion of trade secrets or technological know­ how, will create barriers to entry in the solar industry? If so, explain. 3. Federal Programs and Policies (a) To what extent do current Federal re­ search, development, or demonstration pro­ grams, or the implementation of such pro­ grams, promote, or discourage the develop­ ment of a competitive environment in the solar energy industry? Are any Federal pro­ grams likely to create barriers to entry in the solar industry? Please explain by identi­ fying and discussing specific programs. (b) Aside from Federal programs explicitly designed to aid small businesses, to what extent do current Federal solar programs, or the implementation of such programs, favor or disfavor small businesses? Please explain by identifying and discussing specif­ ic programs.

(c) Are there any considerations relating to competition in the solar industry that suggest the need for additional Federal pro­ grams or policies designed to help small businesses in the areas of solar research, de­ velopment, or demonstration awards, pro­ curements, or loans, or in any other areas? If favorable treatment is warranted, what specific programs or policies are recom­ mended? What positive and negative com­ petitive consequences would such programs or policies have? (d) Are there any considerations relating to competition in the solar industry that suggest the need for a Federal policy limit­ ing the involvement of large energy compa­ nies or other large companies in Federal solar research, development or demonstra­ tion programs? A policy encouraging the participation of large energy companies or other large companies? How could any such policies be implemented? What long-run ef­ fects on competition would such policies have? (e) Comment on the need for and the com­ petitive consequences of implementing the following policy options:

(1 ) a limitation on Federal solar awards to large energy companies; (2) a limitation on Federal solar awards to large nonenergy companies; (3) a policy designed to encourage or re­ quire the participation of greater numbers of types of organizations in Federal solar programs;

(4) a mandatory set-aside for small busi­ nesses of a dollar or percentage amount of Federal solar awards;

(5) a limitation on the size of individual Federal solar research, development or demonstration projects;

(6) a requirement that Federal officials consider as factors in the assignment of solar research, development and demon­ stration awards the potential of the awards to contribute to a situation of market dominance or monopolization and the long-term costs to society that might result;

(7) a requirement that Federal solar of­ ficials limit or eliminate solar awards to firms with dominant market positions or with the short-term potential of attaining dominance in the solar market; (8) a mandatory licensing procedure for privately developed solar patents. What impact would these policy options have on the ultimate program goals of the Federal solar programs affected? (f) Are there any competitive problems presented in the solar industry by current Federal policy in the areas of patenting and licensing of inventions developed in the course of Federal research and development work or background patent rights? If so, ex­ plain. Do such policies have other adverse effects on the solar industry? (g) Are there alternatives or modifications to current Federal patent policy that would provide greater incentives for technological developments in the solar area? That would not unduly increase the potential for mo­ nopolization, suppression or delay in the commercialization of developments made in the course of government awards? Comment on the propriéty and feasibility of any alter­ natives is invited.

FEDERAL REGISTER, V O L 43, NO. 156— FRIDAY, AUGUST 11» 1978

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NOTICES 35749 4. Standards and Testing (a) Are there any competitive or consumer problems presented by existing or proposed privately developed solar standards? By ex­ isting or proposed Federal solar standards? If so, explain.

(b) Are there any aspects of the current private standards development process that are likely to affect adversely consumers and/or competition in the solar industry? Are there any aspects of the current Feder­ al role in the solar standards development process that are likely to affect adversely consumers and/or competition? (c) Is there a need for suggested or man­ datory Federal standards for performance, safety, installation, or any other product at­ tributes of solar equipment? How would the presence or absence of such standards affect the development of a nationwide solar in­ dustry? Would specific firms or types of firms be particularly advantaged or disad­ vantaged in either case? Would the absence of Federal standards be likely to lead to nu­ merous and/or incompatible standards and testing methodologies, or to excessive costs fortesting? (d) To what extent, if at all, do existing State and local building codes inhibit devel­ opment of the solar industry or individual solar companies? What are the competitive advantages and disadvantages for the solar industry of a federally developed mandatory building code? Of a federally developed model building code? (e) What are the costs to competition of mandatory certification, training, or licens­ ing requirements for solar equipment manu­ facturers, retailers, and installers? What are the benefits? 5. Warranties (a) What beneficial effects have the war­ ranty requirements for the fourth cycle of the HUD residential demonstration pro­ gram had on competition or individual com­ petitors in the solar industry? What adverse effects? (b) Is there a need for Federal warranties, similar to the HUD demonstration program warranties, for all solar equipment and in­ stallations? What effect would such warran­ ties have on the solar industry, on specific solar companies or types of companies, on consumers, and on the cost of solar equip­ ment? (c) What procedures or approaches are available as alternatives to mandatory war­ ranties that would provide replacement or reimbursement to consumers for defective solar equipment? That would provide incen­ tives to the development of reliable, durable products and safe and effective installation procedures? Would any such alternatives be likely to advantage or disadvantage certain companies or types of companies in com­ parison with the rest of the solar industry? Would any such alternatives have other ad­ verse competitive effects? Comment on the propriety and feasibility of any alternatives is invited.

6. Access to Capital (a) Do small enterprises currently have particular trouble obtaining capital from private or Government sources in order to engage in solar research and development work or to begin or expand solar businesses? Do solar firms have more difficulty in this regard than firms in other similar, relatively v new industries? If so, explain. \ (b) What are the likely competitive conse­ quences of a shortage of investment capital in the solar industry? Would this be likely to lead to an increase in acquisitions, merg­ ers, and/or joint ventures? 7. Marketing Practices (a) What methods of distributing solar products are currently being employed? Are small solar businesses likely to experience undue difficulty establishing marketing and distribution networks? If so, explain. (b) To what extent are utilities likely to enter into exclusive dealing agreements or practices with local solar installers, either directly or indirectly? What effect would such arrangements have on competition in the solar industry? (c) What are the likely competitive conse­ quences of utilities leasing solar equipment to consumers? Is there a need for any re­ strictions on utility involvement in such leasing activities? Would such restrictions have any adverse competitive effects? By direction of the Commission dated July 28,1978.

Carol M. T homas, Secretary.

[FR Doc. 78-22436 Filed 8-10-78; 8:45 am]