
DATE: Sunday, August 17, 1997               TAG: 9708170056

SECTION: FRONT                   PAGE: A1   EDITION: FINAL 

SOURCE: BY LEDYARD KING, STAFF WRITER 

                                            LENGTH:  198 lines

DEREGULATION: LESS POWER TO YOU

You've been promised an opportunity to choose your power company and, ultimately, a future of lower electricity bills.

In theory, the slow and measured dismantling of the nation's electric utilities, one of America's last and most powerful monopolies, should deliver just that.

But advocates for Virginia consumers - especially the poor, the elderly and those in rural communities - say electric utility deregulation is a contest with few winners. They fear that residents have the most to lose.

And the steady cascade of dollars the utilities have been pouring into state political races this fall heightens their concern.

Virginia's next governor and state legislators will draw the complex rules to restructure power companies. Consumer groups fear that average homeowners might have to shoulder higher rates as businesses, local governments and the utilities protect their own interests.

``Contrary to what some proponents of restructuring contend, there is no guarantee that residential taxpayers will benefit from restructuring,'' Jack R. Hundley of the Virginia chapter of the American Association of Retired Persons told a General Assembly committee studying the issue Tuesday. ``If the outcome is left entirely to the marketplace, residential customers are likely to be the last class of customers to receive any benefits from restructuring - if they receive any benefits at all.''

AARP, which wants the state to guarantee consumer protections and lower rates under deregulation, has about 790,000 Virginia members, making it a powerful bloc come election time.

But the utilities loom as far more influential players, if campaign contributions are any measure.

Virginia Power, serving 1.9 million of the state's roughly 2.7 million customers, is the largest single corporate donor to House and Senate campaigns since 1995, according to a review of election records.

Via its three political contribution arms, the utility has given $600,000 to Republican and Democratic nominees for governor, lieutenant governor and attorney general as well as state parties and candidates for the House and Senate. Only state senators are not up for election this fall.

Eighty of the 162 candidates for the House received Virginia Power money. Among those receiving the most: House Speaker Thomas W. Moss Jr., D-Norfolk, who received $7,000, and House Majority Leader C. Richard Cranwell, D-Vinton, who got nearly $17,000.

``I think it's a reason for concern. There's always a connection between money and power,'' said Robert Goldsmith, president of the Abingdon-based Virginia Council Against Poverty. ``I don't think they're (contributing) solely because they're interested in good government. I think they expect something in return.''

Nonsense, said Bill Crump, Virginia Power's chief lobbyist.

``All we ask for is a fair hearing,'' he said. ``We're not asking for special treatment.''

Office-seekers, too, said contributions do not come with strings attached.

``I view their campaign contribution as an investment in good government, not so much that they're out to buy votes or influence John Hager,'' said Hager, the Republican nominee for lieutenant governor, who has received $20,000 from electric utilities this campaign season.

Full-scale deregulation appears to be several years away in Virginia. But Goldsmith frets that utilities and big businesses already have begun jousting for advantages that could disrupt the reliability of electric service and push consumer rates higher.

Under deregulation, Virginia customers would be able to shop around for the best rate available.

But Hundley, Goldsmith and other consumer advocates worry that many customers will find shopping for electricity much like the daunting and confusing task of choosing a phone company.

And they worry that big business and the large utilities will benefit first, raising the electricity rates for residents that historically have been lower than the national average.

Industries already have an advantage in Virginia because the state's largest users of electricity have negotiated the lowest rates, Crump and other industry officials said. Large users pay Virginia Power an average of 3 cents per kilowatt-hour, compared with the residential rate of more than 7 cents. The national average for homeowners is a little more than 8 cents.

The utilities want to make sure they remain as competitive as possible under the rules of deregulation, in which out-of-state companies could swoop in with lower rates and steal customers, Crump said.

To do so, Virginia Power wants to recoup some $3 billion from the state for power stations and plants the government said it must build to meet projected demand. Under the rules of regulation, Virginia Power had no choice but to build them.

But demand didn't turn out to be as high as projected. In a deregulated environment, the utility would want to recover its investment - or so-called ``stranded costs.'' If Virginia Power can't collect from the state, the company might have to raise rates and be less competitive, Crump said.

At Tuesday's state legislative committee meeting studying electricity deregulation, AARP's Hundley cautioned lawmakers not to blindly surrender to Virginia Power's quest for total recovery.

Utilities should not be compensated for costs that have already been recovered through charges to customers, he said.

``If ratepayers are asked to pay for an unfair proportion of stranded costs said.

Del. Clifton A. Woodrum, D-Roanoke, vice chairman of the state legislative committee that Hundley was addressing, said he has a lot more listening to do on the subject of deregulation.

But Woodrum said the $2,500 he's received from Virginia Power since 1995 won't be nearly as important as what the voters in his district want.

``Constituent pressures are going to weigh heavily,'' he said.