Back when Enron looked like a good stock pick, policymakers across the country moved to loosen the regulatory constraints on electricity generators in hopes that competition would result in innovation and lower prices.

A group of public power utilities now argues that investors weren’t the only ones who turned out to be wrong. In a new white paper, the American Public Power Association (APPA) says that the move to expand so-called “competitive” energy markets has actually raised costs for consumers without the promised technological advances.

APPA’s white paper has reopened an old, often acrimonious debate among power generators on the benefits of competition.

The dispute has so far played out mostly before the Federal Energy Regulatory Commission, which has responded to complaints about power markets with a proposed rulemaking intended to adjust but not overhaul their operation.

But Congress could soon join the debate. The Senate Energy and Natural Resources Committee plans hearings later this year on the effectiveness of Regional Transmission Organizations (RTOs), which administer electricity markets in the Northeast, Mid-Atlantic, Midwest and California.

APPA’s report prompted a sharp retort from a lobbying group that represents so-called merchant power plants and other utilities that sell power in RTOs.

The Electric Power Supply Association (EPSA) said that APPA’s proposal would “turn the country backward and actually harm the two-thirds of the nation’s consumers and economy served by organized regional wholesale electricity markets.”

EPSA argues restructured markets more efficiently provide signals to power generators as to what the demand for power will be. What’s more, the group argues these same “market-based price signals” can better encourage the development of climate-friendly power generation amid growing worry about global warming.

APPA, which was never excited about the deregulation that was pushed aggressively by Enron and other energy marketers and merchant plants, contends, however, that prices have risen faster in RTO areas than non-RTO regions.

Joe Nipper, senior vice president of APPA, said the basic problem is that the structure of the RTO has discouraged long-term contracts and promoted shorter, pricier deals, to the benefit of power suppliers and the detriment of consumers.

While Nipper acknowledges that electricity costs have gone up everywhere, he says the rate of the increase in RTO regions is double what it is in non-RTO areas.

Unlike other commodities, electricity cannot economically be stored, and it has no replacement. Nipper said those two facts make it harder to structure an effective market.

The prices for power are now disconnected from the actual costs of generating it, APPA argues. Contrary to EPSA’s argument, APPA contends the market has created incentives for generators to withhold capacity in order to increase prices and to refrain from building additional plants.

John Shelk, EPSA president and CEO, doesn’t deny that costs have increased at a higher rate in RTO regions. But he says that is the result of artificial price caps policymakers imposed on sellers during the transition to competitive markets. Prices have increased at a faster clip because the rates were set too low.

Shelk contends the advantages of competition are beginning to be seen. Merchant plants and other competitive suppliers’ stocks are rebounding from the financial dire straits they found themselves in several years ago due to a glut in electricity supply. Several companies, like Enron, didn’t survive.

The ones that did are now in a stronger financial position, reflected in rising stock prices, and are preparing to invest billions of dollars to add capacity to meet future demand. But to invest, they need assurances that they will get a fair price for their power, Shelk said.

The market is also better able to factor in the price of carbon dioxide emissions, which would rise dramatically if Congress passed a global warming bill capping greenhouse gas emissions, Shelk indicated.