Electric Utility Deregulation Express Losing Steam
By Bair S Walker , Senior Writer
Barring filibusters and sleeping pills, few things set heads nodding faster than talk about electric utility deregulation. But for the nation's largest business, the stodgy, $208-billion electric power industry, it's big. It's also big for state legislators, consumer advocates and environmentalists. And one day soon, ordinary consumers may also take interest, should this soporific issue deliver promised cost savings in the double-digits.
Eighteen states have taken steps to see if electric utility deregulation will bring savings. It's a fact of life in California, Pennsylvania, Rhode Island and Massachusetts. In those states, savings have been smaller than promised so far.
Nine other states -- Arizona, Connecticut, Illinois, Nevada, New Hampshire, Maine, Montana, Oklahoma and Virginia have enacted deregulation laws, but have not yet begun implementing them.
Five more states Maryland, New Jersey, New York, Michigan and Vermont have promulgated regulations, paving the way for a restructuring of the power industry there.
Late last year, Arizona postponed its scheduled December 1998 implementation of utility deregulation, saying it wanted to study the matter further.
Given the breadth of the movement, how come so few people know about the effort to change the character of an industry that touches practically every U.S. citizen? Part of the reason is that utility deregulation involves concepts that don't lend themselves to pithy sound bites or memorable video.
The basic argument for it is this: If companies other than local electric monopolies are allowed to provide power, that should spur competition. And that should lead to lower prices.
That has been the case where electric utility deregulation is operational. But business has benefited far more than consumers, leading to widespread public indifference.
"There are signs that deregulation is running out of steam at the state level. Those states that have switched have had little interest from residential consumers," says Charles Acquard, who heads the National Association of State Utility Consumer Advocates.
Acquard's group primarily represents residential and small business consumers, groups that have noticed only single-digit decreases in their bills when they switch electricity providers.
Big businesses have fared better because competing power companies are eager to serve them.
But failure to deliver to the extent consumers might get excited about it isn't the only shortcoming of electric utility deregulation encountered so far. Tax revenues lost as a result of the process have forced legislators to scurry to make up the money elsewhere.
As they do, in many cases they find themselves having to explain to their constituents why customers must help electric power companies recoup "stranded costs," the term for the billions in compensation that utilities stand to receive for investments in power plants that have suddenly become unprofitable.