Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: SUNDAY, August 28, 1994                   TAG: 9408260042
SECTION: BUSINESS                    PAGE: F1   EDITION: METRO 
SOURCE: GREG EDWARDS STAFF WRITER
DATELINE:                                 LENGTH: Long

YOU CAN'T STORE ELECTRICITY, SO THESE GUYS SELL IT

Imagine Candice Bergen, TV's Murphy Brown, standing in front of her dressing table telling you how her hair dryer runs cheaper and with more vigor using her power company than it does with "that other" company.

That may sound preposterous, but competition in the retail electric business is on the way.

Take The National Power Management Co., based in Tysons Corner in Northern Virginia. The company describes itself as "the nation's first independent power company."

National Power is not a public utility. It has no electric generating plants and owns no power lines. But it expects to buy surplus power from other companies' plants and, taking advantage of open-access provisions in the 1992 federal energy bill, move it along existing utility lines to customers wanting a cheaper power source than their local and regional utilities.

The company has no customers yet but is lining up sources of electricity.

Glenn Williams, National Power's president, envisions a future where the power industry will be just like the telephone industry, with multiple tiers of services available, choice of power providers and uniform pricing across the country.

In this scenario, traditional utilities like Appalachian Power and Virginia Power would become operating companies similar to what regional telephone companies became after the AT&T breakup. They would provide wires to your home and other services, but you might buy your electricity from someone else.

With the size of the market being thrown open, Williams sees the competition developing sooner rather than later simply because of what's at stake. The electric power business in the United States is an $800 billion a year business, or 10 times larger than the telephone industry, he said.

What really shook up the power industry was the passage of the Energy Policy Act of 1992.

The federal energy bill created a new category of independent power producers, which - unlike those allowed under a 1978 law - are not required to use renewable fuels or cogenerate electricity in tandem with some other fuel-consuming activity such as manufacturing.

Electric utilities are not required to buy power from these independents; but to make it easier from them to sell power, Congress gave the Federal Energy Regulatory Commission authority to order utilities to open up their transmission lines to outsiders interested in selling wholesale power. Wholesale power is power sold to co-ops, municipal utilities and others who resell it to retail customers.

Congress "is now, as a matter of policy, opening up the last great monopoly to competition," Williams said.

National Power first plans to become a wholesale power broker but eventually expects to get into the retail business as soon as state regulatory commissions clear the way. In its 1992 legislation, Congress avoided the issue of competition for the retail sale of power, leaving its resolution to the individual states.

California, that perennial trendsetter among the states, is seeking to lead the way. In April, California agreed that it would begin work on developing a policy for the retail wheeling of power along an open transmission system.

While California's is a significant move and may prompt other states to act, retail wheeling of power has already occurred in New York and Massachusetts, Williams said. The New York Power Authority has been going into other utilities' franchise areas to sell retail power to industrial customers, he said.

It's unclear whether the State Corporation Commission will have a role when National Power begins doing business in Virginia, commission spokesman Ken Schrad said. That depends on what the company plans to do and whether existing utilities challenge its right to do that under current law.

Richmond-based Virginia Power, for instance, has challenged a plan by Louisville Gas and Electric to build power plants at DuPont factories in Virginia, depriving Virginia Power of a large customer.

Virginia may need to change its utility laws before competition would be possible in the retail area, Schrad said. The state may need to consider what will happen to the rates paid by remaining customers if utilities like Appalachian Power and Virginia Power lose revenue to competition, he said.

The commission is aware of the changes going on in the electric power industry, Schrad said. "You can't open a trade magazine and not read about it."

Within the next two years, National Power expects to be open for business in all 50 states. The company will definitely be seeking customers in Virginia, which is among the top 20 percent of power-consuming states, Williams said.

The company will make its services available statewide rather than just seeking customers in areas where it has the best competitive advantage, Williams said. "Cream skimming," he said, "is not good business."

When asked if he would have a tough time competing with Roanoke's Appalachian Power because the company has some of the country's lowest rates, Williams said he might want to talk to Apco about supplying his company with power. (A recent study of 60 utilities nationwide by the Jacksonville, Fla., Electric Authority ranked Apco fourth-cheapest in terms of electric rates.)

Apco spokesman Don Johnson said no one at his company knows enough about National Power to discuss what the new company might mean for Apco's business. If National Power wants to buy power, it'll have to talk to Apco's parent American Electric Power Co., he said.