Consumer Groups Unhappy with Enron's Deregulation Push

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PHILADELPHIA -- Enron made an enemy of consumer activist Lance Haver last October when it offered to cut Philadelphia electricity rates by 20 percent.

Naturally, Haver didn't oppose a rate cut. He and other activists, along with government and industry officials, spent months negotiating with Peco Energy, Philadelphia's electric utility, to win residential rate cuts of up to 10 percent.

What he feared was that Enron's maneuver would give regulators a reason to reject the carefully negotiated Peco plan for opening Philadelphia's power sales to competition, and eliminate any guaranteed rate reductions. He was right. The Pennsylvania Public Utility Commission turned down Peco and Enron's proposals, and adopted rules it said would let competition reduce rates without mandated cuts. "It hurt," said Haver, head of the 3,000-member Consumers Education and Protective Association. "It was very, very damaging to the consumer's interest." It wasn't supposed to be this way. Consumer advocates were expected to be some of Enron's biggest allies in the push to end utility monopolies. With a combination of high-profile television advertising and sophisticated lobbying, Enron is trying hard to convince rate payers and legislators alike that removing regulatory controls from the $200 million-a-year U.S. electricity market will save consumers money. Yet from Pennsylvania to Oregon, where many worry that deregulation will lift rates by sending low-cost hydroelectric power to California, consumer advocates are joining with utilities and politicians to hinder Enron's crusade. In most cases, Houston-based Enron has the backing of businesses, especially large industrial users, in its efforts to move rapidly to competition. Big consumers of electricity can negotiate much lower rates in a deregulated market. Yet activists fear competition will hurt residential customers if rate cuts aren't written into deregulation laws. Without the guarantees, electric companies will charge small customers more to make up for the lower returns from industrial customers, activists say. "It's the customers who are able to be served at a lower price that will want the competition," said Sam Peltzman, an economics professor at the University of Chicago's Graduate School of Business. Public Citizen, the Washington-based consumer advocacy group, supports the concept of opening the electricity market to competition. It just doesn't share Enron's faith that moving quickly offers much to consumers. "We're very queasy about deregulation," said Charlie Higgins, a Public Citizen policy analyst. "There's big problems with the current system, but the proposals put forward by Enron won't necessarily benefit the consumer." Enron is used to such criticism. Once simply a regional natural- gas pipeline company, Enron steamrollered rivals in the 1980s to become the largest U. …