ROANOKE TIMES
Copyright (c) 1996, Roanoke Times
DATE: Wednesday, October 16, 1996 TAG: 9610160029
SECTION: BUSINESS PAGE: B-6 EDITION: METRO
SOURCE: GREG EDWARDS STAFF WRITER
IF CONGRESS PASSES the legislation, a Virginian could buy power from a supplier in Oregon, Rep. Rick Boucher predicts.
Congress will pass legislation in the next two years that will require the nation's utilities to compete for retail sales of electricity to consumers, Rep. Rick Boucher, D-Abingdon, predicted Tuesday.
Once the law is passed, a Virginia consumer could buy power from a supplier in Oregon, Boucher said. He spoke at the Virginia Coal Council's annual conference at the Hotel Roanoke and Conference Center.
The relationship between coal producers and their utility customers will change in a restructured, competitive power industry, Boucher and others advised.
Boucher, who is campaigning for re-election to represent Virginia's 9th Congressional District, said he plans to take a leading role in restructuring and bringing retail competition to the power industry.
However, a yearlong study of retail competition in the power industry by the staff of the State Corporation Commission released this summer concluded that Virginia should move carefully on the issue. Because electric rates are low in Virginia compared with other states, Virginia may have "little to gain and much to lose" by being a leader in the move to competition in power sales, the staff said.
Congress provided for competition in the traditionally monopolistic power industry on the wholesale level in the 1992 Energy Bill. That law directed the Federal Energy Regulatory Commission to develop a policy for opening power transmission lines to competitors. Now, besides Congress, 47 states are at some stage of investigating retail competition.
Boucher said nothing in legislation to restructure the power industry being considered by Congress should lead to higher electric rates for Southwest Virginia consumers. On the contrary, rates may drop after American Electric Power Co. is forced to open up its lines in the region to competitors, he said.
AEP, which primarily burns coal and is considered a low-cost power producer, has endorsed the move to retail competition. Virginia Power, on the other hand, which operates two nuclear plants, seems to think the SCC staff's go-slow approach is correct. Kenneth Moore of Virginia Power warned a "one-size-fits-all" federal law might end up hurting some smaller power customers.
"The stakes are high for coal" as the power industry changes because more than 80 percent of the coal mined in the United States goes to utilities and more than half the nation's power is produced by burning coal, said Donald Santa, an FERC commissioner. Retail competition, which is inevitable, he said, will profoundly change the way power producers deal with the coal industry.
Utilities will no longer be guaranteed a set rate of return by state utility commissions, and price competition among power producers will provide a "tremendous" incentive for companies to cut costs, Santa said. Natural gas - which can generate electricity cheaper, partly because it is cleaner and its emissions are easier to control - will provide increasing competition for coal in the power generation, Santa and others noted.
Locating new power plants at the mouth of mines and eliminating rail transportation costs might help offset the cost advantage that natural gas has over coal in newly built power plants, said Chris Iribe of U.S. Generating Co., an independent power producer that owns 17 power plants nationwide. But, to avoid the problems of long-distance transmission of power, it might be better to locate new plants where the most people live, which would give an advantage to cleaner gas over coal, he said.
Sen. John Warner, R-Va., who also spoke at the conference, said restructuring of the electric industry should not be tied to further limits on power plant emissions as he said the Clinton administration is considering. Some critics have suggested that competition among utilities could lead them to continue using older, dirtier power plants, increasing their burning of coal and producing more pollution.
LENGTH: Medium: 74 linesby CNB