ROANOKE TIMES
Copyright (c) 1997, Roanoke Times
DATE: Saturday, March 1, 1997 TAG: 9703030022
SECTION: BUSINESS PAGE: A-5 EDITION: METRO
DATELINE: BLACKSBURG
SOURCE: GREG EDWARDS STAFF WRITER
Legislation before Congress would clear the way for consumer-level competition in the electric power industry.
And where competition is an issue, the proposed law would give ultimate say-so to the federal government on matters such as whether a new power line should be built, Rep. Rick Boucher, D-Abingdon, said Friday.
If the legislation passes, the Federal Energy Regulatory Commission, rather than public service and corporation commissions in the individual states, could have the final word on whether a new interstate line - such American Electric Power Co.'s proposed 765,000-volt line from West Virginia to near Roanoke - is needed.
Boucher supports the legislation, which would open the nation's power transmission grid to competing suppliers on the retail - or consumer - level. He held a news conference at Virginia Tech's Corporate Research Center to talk about it.
Such competition generally would mean a drop in power rates for consumers of 15 percent to 20 percent, Boucher said. In parts of the country where rates are now exceptionally high, the savings could be as much as 40 percent, he said.
Large power-consuming businesses such as General Electric Co.'s industrial motors and controls plant in Salem could save millions of dollars annually if power companies competed for customers, Boucher said.
Homeowners, he said, could achieve the same benefits of competition by joining together in buyers' cooperatives to exercise bulk purchasing power.
Cheaper power would allow American manufacturers to be more competitive in the international market, Boucher said.
In the 1992 federal energy bill, Congress introduced competition to the power industry on the wholesale level by allowing FERC to order companies to open their transmission lines to competitors.
An example of a wholesale power sale would be one from a power producer, such as AEP or Virginia Power, to an electric cooperative or a municipal utility. Bristol's city-owned utility, Boucher recalled, recently switched from the Tennessee Valley Authority, its long-time supplier, to a Midwest utility offering cheaper power.
Since passage of the energy bill, most states and Congress have considered ways to bring competition to the consumer level. Virginia's State Corporation Commission and the General Assembly are studying the issue.
After a yearlong study, the SCC's staff last summer advised the commission to move carefully on the issue of retail competition. The staff said Virginia, where electric rates are low compared with other states, may have "little to gain and much to lose" by being a leader on the path to retail competition.
AEP, which primarily burns coal to produce power and is considered a low-cost producer, has whole-heartedly endorsed retail competition. Virginia Power, the state's largest utility and whose rates are higher than AEP's, has agreed with the SCC staff's go-slow approach.
Congressional action, however, could eliminate the debate on the timing of competition.
Boucher said the House Commerce subcommittee on energy and power, on which he serves, is preparing the legislation that Congress will use to deregulate the power industry.
The approach the committee will take is to have the federal government perform the simple act of opening the transmission grid to competition, he said, and all other major decisions related to deregulation would be left to the states. He supports an approach that would give the states a maximum amount of regulatory control, Boucher said.
Boucher compared power-industry restructuring to last year's deregulation of the telecommunication industry, in which he was a major player. The power industry is the nation's last remaining major monopoly, and the effort to bring competition to it will be the leading commercial debate in Congress this year, he said.
Competition could benefit Southwest Virginia's coal industry, Boucher said. The price of fuel, he said, will be a major concern for competing utilities, and coal is the most efficient and lowest-cost fuel. Already, roughly 56 percent of the nation's power is generated by burning coal. Nuclear energy is the next most popular source at 22 percent.
Because it is cheaper to move coal by wire in the form of electricity than move it in railroad cars, competition could lead to economic investment for new power plants close to the mines in the state's coal counties, Boucher said.
AEP, which serves most of Southwest Virginia, already has some of the lowest power rates in the country. Some have argued that those rates could rise if AEP starts competing with higher-cost power producers in other parts of the country, increasing demand for its electricity. Boucher, however, said rates in Southwest Virginia would actually decrease as AEP begins operating its plants at higher, more-efficient levels.
In the past, industrial plants have located in Southwest Virginia because the region offers low-cost electricity. Power industry competition and the ability of manufacturers to buy power from anywhere they want would not hurt, Boucher said. Power rates here should remain lower than in most other parts of the country, he said.
Boucher said he anticipates legislation on competition to be approved by the Commerce Committee and debated on the House floor this summer and fall.
LENGTH: Medium: 96 linesby CNB