Socket to Me

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"This is the last dinosaur," says Joan Ringel, director of Coloradans for Consumer Choice in Electricity, an industry group that's pushing for utility deregulation. "It's time for it to be set free."

But while most consumers have indeed benefited from deregulation of the airline and telephone industries (though Colorado's residential phone customers have yet to see significant competition to US West), Reif insists that comparing electrical power to those services is just plain wrong. He says potential breakdowns in the power system are far more worrisome than getting bumped off an overbooked flight or hearing an "all circuits are full" message when you try to make a long-distance call. If the power market is divided up among dozens of suppliers--all buying and selling power over thousands of miles--and consumers have to deal with different companies for power generation, transmission, repair and billing, Reif says the potential for devastating power outages will rise.

"The electrical system has become so reliable, people are surprised when the power goes out," he says. "Right now it's clear public utilities are responsible when that happens."

Reif points to the massive 1996 power outage that affected more than four million people in nine Western states as an example of the complexities of moving power over huge distances. If deregulation is approved, he says, Coloradans may soon be asking themselves a new question: Where were you when the lights went out?

If old-fashioned power providers are dinosaurs, as Ringel claims, Stan Lewandowski fears his customers are about to be sacrificed to big-money utilities with the appetite of a tyrannosaur.

Lewandowski is the general manager of the Intermountain Rural Electric Association, a customer-owned utility that serves 76,000 people spread out over 5,000 square miles from Elbert County to Fairplay. The IREA buys power from producers like Public Service Company and then resells it to its members.

With an average of six customers per mile of transmission line, IREA serves rural areas that larger utilities have traditionally shunned. In the small towns fed by IREA's lines, commercial customers like the local Safeway pay a large part of the total cost to run power lines to places like Deer Trail or Conifer. In Lewandowski's nightmare scenario, aggressive new energy companies will sign up all the Safeways in his service area, taking those revenues away from IREA and saddling the remaining residential customers with the cost of maintaining the system.

"If you allow the large industrial customers to leave, the residential users will take it on the chin," predicts Lewandowski. "They'll cherry-pick my large loads--the supermarkets, Martin Marietta, the factory outlets and the school districts. The only thing I'll have left is what nobody else wants. Nobody will be interested in providing power to Jefferson, Colorado. How could I serve those people? The costs would be astronomical."

Whereas huge companies like Coors and Conoco could easily bargain for power with dozens of different suppliers, the homeowners and small businesses that make up the majority of utility customers would have a harder time fending for themselves. Consumer advocates say that's the problem with the whole idea.

"We're very concerned that retail wheeling is an attempt by big companies to get a volume discount," says Dian Callaghan of the Office of Consumer Counsel, a state agency charged with representing consumers on utility issues. "Who's going to make up the difference? Those customers like residential customers that don't have bargaining power."

Callaghan says power can't be thought of as just another consumer item. "There's a reason we regulated electricity and gas for all these years," she says. "We thought it was an essential commodity. This isn't like walking into Target and buying something. It's much more complicated."

Utilities like IREA and Public Service already offer some discounts to their large industrial customers, but under Colorado law, they're not allowed to pass the cost of those discounts on to residential users. In a deregulated power market, such consumer protections would be history, and residential customers could be pitted against Fortune 500 companies bidding for power.

But advocates of deregulation like Ringel say there are ways for homeowners and small businesses to bargain for power in much the same fashion as large users. Under Ringel's scenario, a group of homeowners in Thornton could negotiate with a huge company like Houston-based Enron. The power would enter their homes through Public Service lines, but Enron would be the supplier.

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Stuart Steers
Contact: Stuart Steers