THE VIRGINIAN-PILOT
Copyright (c) 1996, Landmark Communications, Inc.
DATE: Monday, August 19, 1996 TAG: 9608170015
SECTION: FRONT PAGE: A7 EDITION: FINAL
TYPE: Another View
SOURCE: By CLYDE WAYNE CREWS JR.
LENGTH: 83 lines
Low-cost electric-power generation is shaking up the monopoly U.S. electric-utility industry, and the fight has come to Virginia. Many Virginia customers are realizing that only politics, not technology, prevents them from shopping for cheap juice.
Right now, residential customer choice is limited to paying the power company or chopping wood. But deregulation at the state and federal levels ultimately will eliminate that monopoly power. Electric utilities and nonutility independent power producers, along with the ``power marketers'' who will link them to customers, will turn today's stodgy system on end. Power bills too high? Pick up the phone and switch. That's the goal.
But the regulatory thicket is immensely tangled, and standing in the way of a quick unwinding are entrenched utilities not keen on giving up a captive customer base. Even utilities with comparatively low costs that likely would thrive under competition - such as Virginia Power - resist change despite pro-competitive rhetoric. For instance, like all Virginia Power customers, I received a letter from company President J. T. Rhodes in a recent electric bill, which stated that Virginia Power supports an ``orderly and careful transition'' to competition that preserves ``equitable rates and service options for all classes of customers - not just the large industrial and commercial concerns with market clout.''
Sounds great. Competition should not mean big customers opt out and leave residential ratepayers to absorb the utility's costs. Household customers should have the right to choose, too.
Actions still speak louder than words. In what the Electricity Daily called a ``home run with the legislature,'' Virginia Power in March secured passage of a bill in the state legislature allowing it to give special discounted rates to - guess who? - large industrial power customers. That partly neutralizes those most likely, and most politically able, to clamor for a universal right to shop for juice.
But even these large customers realize they'd be even better off under competition, and they actually opposed the special deals in the legislature.
Contrary to Mr. Rhodes' letter, absent market competition, only the ``concerns with market clout'' get to benefit from lower rates in Virginia. And if Virginia Power doesn't cut costs to match the discounts to industrial customers, residential ratepayers may have to take up the slack despite assurances to the contrary. That's what happened to small-business and residential customers in other states.
Virginia Power calls its newly approved discounts to large customers ``economic-development rates, since they will enable the company to retain industry and attract new business to Virginia. But competition would do the same thing, and consumers equally deserve the ``family-budget rates'' that market competition would deliver. Genuine competition advances choice, not politically supported profits and cost shifting.
Virginia Power argues that ``reliability'' is the overriding concern during deregulation, that free-wheeling competition might interrupt service. Aside from the fact that customers can be protected legislatively during a transition, reliability best flourishes where customer choice impacts the bottom line. No customer should be reduced to depending upon the pretended self-sacrifice of utilities for electricity, any more than customers should worry about the reliability of shoes, magazines, milk or e-mail. The electricity-reform debate so far in Virginia betrays the emptiness of utility claims that competition will harm smaller customers, that ``big dogs eat first.'' Consumers, especially household ratepayers, have more to fear from deal cutting that allows monopolies to cherry-pick their own biggest customers. While Virginia Power's own big dogs eat, smaller businesses and residential ratepayers must wait months or years for their right to choose. Virginia Power's securing of what can only be called political price supports - albeit at a lower level than that prevailing today - is a tip-off the company recognizes that customers keep more of their own money under competition.
Utility abuses stem from exclusive franchises at the local level and monopoly control of all the power-line rights of way. If alternate transmission lines existed, Virginia Power couldn't hamper customer choice today. For example, little-known new software allows computer users to place free long-distance phone calls on the Internet, bypassing long-distance switching systems altogether. But long-distance phone companies can do little about it because - unlike utilities' exclusive control of transmission rights - they don't own the Internet servers that route the phone calls between computers.
Only monopoly power relieves utilities of the necessity to compete and reduce prices for all. That monopoly power is what must be removed: Special rates for select customers won't do.
KEYWORDS: VIRGINIA POWER by CNB