DATE: Thursday, April 17, 1997              TAG: 9704170002

SECTION: LOCAL                   PAGE: B10  EDITION: FINAL 

TYPE: Opinion

SOURCE: BY HELEN SONENSHINE 

                                            LENGTH:   65 lines

AND IN THIS HAND: BETTER ELECTRIC SERVICE

They say President Truman started the joke about the one-handed economist. After years of hearing ``on the one hand, on the other hand'' economic arguments, an exasperated president reportedly exclaimed ``give me a one-handed economist!''

Well, as someone who taught economics for six years, I have a very plain one-handed economic argument to make: The sooner we deregulate our nation's outdated electric-utility system - a system that dates back even before Truman's time - the sooner electric-power customers in Virginia and across this country will enjoy better and less-expensive electric service.

Our nation's electric-power-delivery system is one of the last of the great monopolies. Tightly regulated since the 1930s, it is a system that has allowed a collection of monopoly utilities to provide electricity to our homes and businesses free of competition and at rates that are guaranteed to turn a profit. The only guarantee we, as consumers, have is that we pay artificially high prices for that electricity.

The bulk of wholesale electricity in the United States sells for about 2 cents per kilowatt-hour. Residential customers of Virginia Power, on the other hand, pay more than 8 cents per kilowatt-hour; and commercial customers pay more than 6 cents per kilowatt-hour. True, many states pay even more. But to the average economist - or the average consumer - there is no rational basis for such a mark-up. It would not be tolerated in any other business.

Opening the electric-utility industry to competition means consumers will have the right to choose service from the supplier who best meets their needs, and the utilities will be forced to compete and innovate in order to meet those needs. Other industries have been forced to face competition, and in every instance it has benefited consumers. Years ago, we used to experience periodic natural-gas shortages here in Virginia. Since the natural-gas industry was deregulated, however, not only are there no supply problems but natural gas is being sold at a lower price.

The same is true in the telecommunications industry. Once telephone service was deregulated, not only were we able to select our own long-distance carriers, we could also pick and choose among a host of other options such as call-forwarding, caller ID, call waiting and voice mail. That's what competition is all about - providing consumers with choices, not protecting the companies that serve them.

The utility monopolies will try to delay deregulation for as long as they can. Who can blame them? Today they are permitted to run a $200 billion-a-year business completely free from competition. One of their delay tactics is to continue studying deregulation and the effects it will have. They will speak kindly of competition and efficiency, but they want to stretch their monopolies into the next century. Meanwhile, you and I continue to pay inflated electric rates.

Here in Virginia, we are rightly wary of large federal schemes to impose solutions from Washington. Deregulation of the electric utilities does just the exact opposite. It demands that Congress give every consumer the right to buy electricity from the best provider available. It is probably our most-important pending consumer issue. Everybody uses electricity, and just about everybody is paying too much for it.

Four federal field hearings on this issue are scheduled to take place in the next few weeks, and one of them will be in Richmond Friday. All of us should be paying attention to this for one very good reason: The sooner we deregulate the electric-power industry, the sooner Virginia will enjoy better service at better prices. There's no ``on the other hand'' about it. MEMO: Helen Sonenshine is a former professor of economics at Tidewater

Community College. She resides in Virginia Beach.

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