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Deregulated electricity industry a disappointment in some locations

Posted: Thursday, August 21, 2003

ANCHORAGE (AP) Energy deregulation so far has failed to deliver the consumer choices and savings on power bills anticipated in many locations, participants in the National Black Caucus of State Legislators energy conference said Wednesday.

And after last week's blackout in portions of eastern Canada and the United States, reliability ensuring that electricity is available has become another concern.

''It's obvious that something's not working,'' said New York Assemblywoman Annette Robinson, D-Brooklyn.

In the complex world of energy industry deregulation, tasks that were once handled by a local utility now are often divided up among companies that provide generation, transmission and distribution services.

In the telecommunications industry, deregulation came about slowly, over two decades, but energy deregulation arrived like ''the big bang,'' said Sandra Mattavous Frye, deputy counsel for the Office of the People's Council in Washington, D.C.

The District of Columbia began an attempt at power retail competition in 1999. Utility Pepco sold its generation assets to Atlanta-based Mirant. The local market was opened to additional power providers, although only 11 percent of residential customers have changed to other suppliers, she said.

''Competition, deregulation and restructuring really have failed to bring tangible benefits to residential customers,'' Mattavous Frye said.

In July, Mirant filed for Chapter 11 protection from creditors in U.S. Bankruptcy Court. If Mirant is not forced to honor its contracts with Pepco, and Pepco were forced to purchase replacement power on the spot market, the additional costs could be as much as $700 million, she said.

In the future, the possibility of some re-regulation will be suggested for the District of Columbia, as well as encouraging Pepco to reacquire some generation, she said.

Legislators from several states attending the conference, which concludes Friday, said they had similar problems.

''I'm for more regulation,'' said Georgia state Rep. Bob Holmes, D-Atlanta.

Carl Pechman, president of Power Economics in Santa Cruz, Calif., urged states not to surrender their regulatory authority to the Federal Energy Regulatory Commission.

During California's energy problems in 2000 and 2001, ''FERC was really part of the problem and not part of the solution,'' he said, contending the commission was ill-prepared to monitor and take action against market manipulation.

''The bottom line is we now need to focus on protecting customers,'' he said.

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