ROANOKE TIMES
Copyright (c) 1997, Roanoke Times
DATE: Thursday, April 3, 1997 TAG: 9704030035
SECTION: VIRGINIA PAGE: A-1 EDITION: METRO
SOURCE: JEFF STURGEON THE ROANOKE TIMES
MEMO: ***CORRECTION***
Published correction ran on April 4, 1997.
A map that accompanied a story in Thursday's paper, about
municipalities that are considering switching power companies, was
intended for use with another article.
Residents of Salem, Bedford and Martinsville are among those who could save up to 20 percent on their electric bills.
Consumers and businesses in five Western Virginia cities - including Salem, Bedford and Martinsville - could save nearly 20 percent on power bills in coming years if they switch electric companies.
The communities would drop service from American Electric Power Co., the region's major power utility, and switch to Cinergy Corp., a Cincinnati company that has offered to charge less. Other communities considering the change are Danville and the town of Richlands. The localities estimate they would save about $91 million on a seven-year contract with Cinergy instead of buying electricity from AEP.
At this point, residents must be customers of one of the municipal electric systems involved in the negotiations to have a shot at the savings. That's only a fraction of Western Virginians. Most people and businesses buy power directly from AEP and would have to wait for a future phase of the electric industry's deregulation to get the option of shopping for power.
Electric companies no longer dominate their primary service territories, because of changes in industry regulations designed to give customers a choice.
Each of the five communities considering dropping AEP owns power-distribution wires running to homes and businesses within their boundaries. They buy most of their current from a single generator. That has been AEP, which both generates electricity and provides the transmission lines to local distribution systems. Salem has used AEP or its predecessor, Appalachian Power Co., for 90 years.
But power transmitters, AEP included, were forced a few years ago to offer passage to transmit other companies' power. This gave communities such as Salem a choice of power generators to buy from. The proposed switch to Cinergy would be the local communities' first significant use of that option.
Virginia is looking at steps to give power-company choice to all ratepayers. It will be at least a year before a decision is made whether to let ratepayers choose and electric companies compete at the so-called retail level for power customers. The deregulation movement to end government rate control is a national issue, however.
AEP, based in Columbus, Ohio, has done an "excellent" job for the communities for many years, Salem officials said in a notice mailed to ratepayers Monday. Dropping AEP would be a "difficult business decision," the notice said, but the move could save thousands of households and businesses money.
Cinergy is offering "reliable power at the least available cost," said Doug Smith, operator of Salem's city electric system and president of the board of the Blue Ridge Power Agency, a coalition of municipal electric systems that negotiated with Cinergy.
Last week, representatives of each of the five communities' electric systems voted to recommend to their elected leaders a switch to Cinergy Corp. on July 1, 1998. Cinergy wants a seven-year commitment. Each government will make its own decision.
The five communities would spend $412 million over the seven years by sticking with AEP, vs. $321 million using Cinergy Corp., according to estimates that do not take future inflation into consideration.
Elected leaders also would decide how much of the savings to pass to ratepayers in the form of lower bills, Smith said. Governments would spend the rest on their municipal electric systems or other services.
AEP, about twice the size of Cinergy, quoted a price to the five communities as they were shopping for power and was a finalist among 21 companies that bid. AEP now realizes last week's recommendation of Cinergy means AEP might lose the communities' business, spokesman Tom Ayres said.
"You make what you consider a competitive offer in your view or interests, and the customer makes his decision," Ayres said Wednesday.
Cinergy spokeswoman Angeline Protogere said, "We're very glad to hear the decision."
LENGTH: Medium: 82 lines ILLUSTRATION: GRAPHIC: Map by RT.by CNB