THE VIRGINIAN-PILOT
Copyright (c) 1996, Landmark Communications, Inc.
DATE: Tuesday, February 20, 1996 TAG: 9602200010
SECTION: FRONT PAGE: A10 EDITION: FINAL
TYPE: Editorial
LENGTH: Medium: 58 lines
Virginia Power has a number of bills before the General Assembly intended to manage anticipated deregulation of the electric utility industry. They have attracted wide and diverse opposition including large employers like Ford and Planters, environmental groups and consumer advocates.
The six bills concern three broad topics. First, stranded investment. The power company argues that it has been required to serve all comers and has invested accordingly. In a deregulated environment, big federal and industrial customers may go elsewhere. That could mean that substantial investments in generating capacity and infrastructure to serve such customers would be devalued overnight. The utility seeks relief if that happens, essentially by making the disappearing customers pay an exit fee.
Other legislation would permit the power company to enter into joint ventures and to offer new services with less red tape. That's essentially a plea for streamlined oversight.
Finally, and most controversially, there's a proposal to permit alternative methods of ratemaking. Virginia Power is now required to charge all customers in a class a similar rate and to tie the price of energy to the cost of producing it. This bill is scheduled for a hearing today before the House Corporations, Insurance and Banking Committee.
The power company worries that federal deregulatory efforts could create a wide-open environment in which it would be at a competitive disadvantage. Trying to maintain the status quo is doomed. The alternative, embodied in these bills, is a gradual transition to a less regulated environment.
A coalition of critics claims there's no need to rush into anything. Even if Congress deregulates, it is talking about a phase-in between now and 2002. Critics further claim the power company is trying to make a power grab. Under the guise of an orderly transition to competition, it is actually trying to lock customers into long-term contracts.
Foes of the power company worry that under an alternate rate regimen those with clout or the ability to exit the system will get favorable rates and captive residential customers will get the shock of their lives.
Opponents note that a study of the possible effects of deregulation is being conducted by the State Corporation Commission. Passing legislation now would decide the matter before the study has even been completed. That's a persuasive argument.
So far, there's been more power exercised than light shed in this debate. Wide-open competition isn't upon us and it isn't clear that Virginia Power would be at a disadvantage if it was. The coalition of alarmed ratepayers worries that a monopoly seeks a competitive advantage long before competition is a reality, thus acquiring the ability to gouge consumers in the meantime.
Both sides may be overstating their cases, but before a decision is made on this important matter, the pros and cons ought to be sorted out by an unbiased umpire. Let the studies proceed. And let the legislation be postponed until more light is available. by CNB