Despite deregulation, some utilities won't compete in Virginia power markets
The News & Advance, Lynchburg, Va. --Sep. 2
Sep. 2--While 3.1 million Virginians have the right to choose their own electric company, few have.
The State Corporation Commission said in its annual report on electric
utility deregulation released Wednesday that nationwide price run-ups,
questionable accounting practices and increased fuel prices have contributed to
Virginia's lack of competition.
"Right now other companies feel they're not able to offer a competitive
price below the price of the incumbent provider," SCC spokesman Andy Farmer
said.
Virginia is not alone.
Almost no competion exists in any of the 17 markets that allow retail
electricity.
The SCC report said most states have decided to drop their efforts to create
competitive utility environments over the years.
Currently only about 1,900 out of 3.1 million people choose to pay
competitors for their electricity.
A company that operates in Northern Virginia offers environmentally-friendly
power that actually costs more than its competitor, Dominion Power.
"There is little competitive activity in the Commonwealth," the
report said.
The General Assembly passed the Electric Utility Restructuring Act in 1999
and the SCC is required to submit this report each year during deregulation,
which will last six more years.
As part of the act, the Assembly put a cap on electric rates. At the end of
2010, the cap will be removed and market forces will determine the cost of
electricity, Farmer said.
But at least one organization is worried about the results of deregulation.
Virginia Citizen's Consumer Council President Irene Leech said there will be
no benefit to competitive utilities. In fact, she said, many consumers will see
their bills go up.
"So far no where has it been successful," she said.
Coupled with competition is cost.
Proponents of deregulation say competition will ultimately save customers
money.
But Leech said it will actually cost people more.
Electric companies in Virginia are required to join regional transmission
organizations that manage huge electric grids that span several states.
Monday the SCC gave American Electric power the go ahead to join PJM
Interconnection.
Leech said PJM market prices are higher than companies like AEP and Dominion
pay, and the cost might be reflected on bills.
Capped rates are an illusion, too, Leech said.
AEP cannot raise rates to recoup any cost associated with joining PJM.
But it can apply for a rate increase every year to make up for environmental
or structural upgrades.
The real issue, the report said, is that Virginia has always had relatively
low electricity costs.
No outside company can offer prices lower than what already exists in the
state and remain profitable.
That means, "... the right to choose has not evolved into the ability to
choose," according to the report.
In other words, simply because competition can exist doesn't mean it has to.
"There are certainly issues to be resolved," Farmer said.
-----
To see more of The News & Advance, or to subscribe to the newspaper, go
to http://www.newsadvance.com .
(c) 2004, The News & Advance, Lynchburg, Va.
Distributed by Knight Ridder/Tribune Business News. For information on
republishing this content, contact us at (800) 661-2511 (U.S.), (213) 237-4914
(worldwide), fax (213) 237-6515, or e-mail reprints@krtinfo.com. D, AEP,