ROANOKE TIMES
Copyright (c) 1996, Roanoke Times
DATE: Wednesday, June 12, 1996 TAG: 9606120007
SECTION: EDITORIAL PAGE: A-11 EDITION: METRO
SOURCE: JIM CONRAN
VIRGINIA - and every other state in the country - may soon be on the receiving end of forced deregulation that could hurt consumers without even bringing economic benefits to the state.
Congress is gearing up to consider a sweeping deregulation plan for that would lower electricity rates for big industrial plants. The problem is that while rates for large electricity users may indeed go down, rates for ordinary customers and small businesses could go up.
Particularly hard-hit would be rural residents, small businesses, Iow-income families and elderly people on fixed incomes. And in Virginia, where industrial customers already pay an average of nearly three cents per kilowatt hour less than residential customers, that is an undeserved and unnecessary effect.
Congress could learn by looking at what those of us who work on behalf of consumers just went through in California.
Our state commission recently completed restructuring California's utility industry, the first state to do so. Now, battle-weary but wise, we are watching with more than a little apprehension as Congress begins to consider plans to deregulate electricity at the national level. We know how hard we worked to protect our state's consumers against the exclusive bottom-line interests of big business; we wonder how that effort could possibly be successfully replicated at a national level, impacting residents and small businesses in Virginia and everywhere else.
Starting no later than 1998, California residents and businesses of all sizes will be able to choose their electricity supplier with the assurance of frozen prices for five years. This deregulation process, lasting four years and involving thousands of Californians, was complex and often difficult. But in the long run, California should be able to claim lower rates for everyone while preserving our environment, reliability of service and the health of small business.
That's a resolution we did not think we would ever see.
Which is why I founded "Consumers First: A Coalition of California Ratepayers" at the start of the state's restructuring process. The state Public Utility Commission's original deregulation proposal in April 1994 would have meant higher electric bills for residents and small business, while lowering rates for big industry. Further, in its effort to move quickly, the commission had not included the public and elected officials in its process.
We feared - rightly - that without taking time to implement consumer safeguards, electric deregulation would harm consumers and California's economy more than anybody imagined.
Fortunately for Californians who don't belong to the Fortune 500, the state legislature and scores of consumer groups unleashed a storm of opposition to the commission's first utility-restructuring proposal. Practically overnight, coalitions and organizations formed to ensure that those most needing protection - the environment, the elderly, rural customers, small businesses and low-income families - were not ignored as big industry muscled its way to lower rates. A grass-roots effort of homeowners, renters, community leaders, senior citizens, disability groups and entrepreneurs mobilized under the mantle of Consumers First and other consumer groups.
The utility commission's call for open competition was a worthy one - no one could argue with the goal of lower prices and production costs. But there were several formidable obstacles.
Our biggest concern was what your consumer advocates care about, too - keeping intact the fragile web of community protections that utilities have formed over the past few decades. The commission's proposal made no provision for maintaining funding for utilities' array of important social, environmental and economic-development programs promoting assistance to low-income families, energy conservation, research in renewable energy sources and business development. We knew that without these kinds of programs, California's collective quality of life might suffer: families without power, businesses lured to other states and our natural environment even more troubled.
To its vast credit, our commission began over. The commissioners listened to every single person and organzation that came forward with a message. Not one voice went unheard during the four rounds of hearings and comment opportunities.
Once it understood its mission, the commission was able to take the time to listen. Who better than California commissioners to understand our own weather conditions, businesses, populations and environmental challenges?
But Congress may issue cookie-cutter electricity deregulation for the entire country - without listening to the many individual voices the way our commission did. Proponents of federal deregulation need to understand how different each state is. California is not Virginia.
Look at the issue of rates. The reason we initiated retail competition in the first place is that our rates have been among the highest in the country. Because our investor-owned utilities were forced into expensive long-term power contracts decades ago, residents have been saddled with rates of 9.9 cents per kilowatt hour. Virginia, on the other hand, has an average residential rate of 7.7 cents per kilowatt hour. Your industrial customers pay 4.1 cents per kilowatt hour.
There are more differences. Virginia has large agricultural and coal-mining industries. Federally mandated electricity deregulation could threaten coal production, which is why the United Mine Workers support leaving decisions up to individual states on how best to increase competition in electricity. The National Farmers Union also opposes congressional intervention. You - with your coal industry, rural areas and small communities - face different issues than we do with our renewable-energy industry and enormous population.
Yes, we needed rate relief, just as everybody wants lower rates for all customers. But we had to worry about preserving our ability to respond to the almost biblical litany of natural disasters that seem to befall our state, and to protect our dynamic renewable-energy market - one that means billions of dollars in international sales and thousands of jobs. Virginia doesn't have those same concerns. In short, our challenges are not your challenges.
Congress needs to understand that.
In part, because of our pioneering effort in California, nearly every other state in the country is closely examining ways to restructure its own electricity-supply industry. Virginia is one of those. California proved that states can indeed introduce competition to benefit their own residents and businesses of every size.
After surviving this battle, I can tell you it's hard enough to protect "little guys" at the state level - there is no way they won't be overlooked in the trample of a rash federal deregulation.
Jim Conran founded Consumers First in California, and is now membership director of the Electric Consumers Alliance, a national coalition of electricity consumers.
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