First Came Phone Deregulation. Is Electricity Next?

Article excerpt

Get ready for television ads like this one:

"Public Service Electric, the best place to buy your electric power. Don't be fooled by competitors' promises of cheap electricity. We will not be undersold. Shop other electric companies first. Then bring us your lowest quote and if we can't beat it, Public Service will give you three weeks of free power for your air conditioner. Call now."

Think it's bizarre? Well, some experts believe the day is coming when you will be able to pick an electric company the same way you pick an airline, supermarket or telephone company.

There won't be multiple wires coming into your house. What will happen is that variouos electric companies will give you their pitches and you'll be able to decide which offers the best deal.

The electric companies won't be household names like Sprint, AT&T and MCI. But the companies could be fighting for your business just as hard as those telephone companies now are.

Your present electric company will be required to carry another company's electric power if you choose. Your present electric company will be paid something for the effort, but the bulk of your payment will go to the power company you picked.

"In the not-too-distant future, a utility may be required to allow its transmission facilities to be used for transactions between any power-generating entity and another utility," says Christopher Grant, a utility industry analyst with Standard & Poor's Corp.

"In turn, it would sell the power to the end user," says Grant. "Of course, the transmitting utility would be compensated for providing such service."

California is the leader in letting consumers pick their own power company. The California Public Service Commission submitted a proposal this spring that would, in stages, allow every electricity customer in the state to choose a power supplier by the year 2002.

The impetus for this change came from a law - called the Energy Policy Act - that President George Bush signed in 1992 just before he left office. The idea was to increase competition and bring down prices.

People eventually will get the chance to choose their electric company, says Craig M. Lucas, senior vice president of Oppenheimer & Co.

But that time hasn't arrived yet. Right now, whole cities will have to take over electrical lines before they can change utilities - an unlikely occurrence.

But utilities already are cutting prices to some industrial customers. So they are behaving like there already is a competitive market in at least one part of their business.

Other experts think that companies, not consumers, are likely to receive the bulk of the benefits from electric utility competition. There are a number of reasons.

First, big companies will have more clout in making deals with electric companies. …