Pennsylvania utility companies may just as well have been burning dollar bills to generate the state's electricity, as far as critics were concerned.

For electricity that cost Pennsylvania customers $1, the rest of the country was paying only 85 cents. In some parts of the state, including Pittsburgh, the difference was even greater.

State officials feared those high rates were costing the state jobs, as new and existing companies alike sought out friendlier locales — 38 states had lower rates. Pennsylvania’s high price for power translated into higher prices on everything from a loaf of bread at the supermarket to a new dress at Kaufmann's.

The rates were so high they triggered a revolution, one to allow people to dump their local utility and shop around for a cheaper electricity supplier.

So it wasn’t as significant as the Boston Tea Party. Call it the Pennsylvania Power Play.

The stakes are enormous. The U.S. electricity industry, with $200 billion in sales, is twice as large as the long-distance telephone market. Pennsylvanians spend $10 billion on power each year. If the state’s rates dropped to the national average, residents and businesses would save $1.5 billion a year.

The push to reform the U.S. power industry has generally come from big business, the customers who stand to gain the most from cheaper electricity prices.

"The typical guy is not sitting at home saying, ‘Hmm, I’m paying too much for electricity … I wish I had a choice.’ That’s not the way it went," said Phil Baratz, president of Total Gas & Electric, a Florida power supplier. "It’s really been the major players … looking to force this down through the utility commissions."

The theory, contested by some, is that competition is the only way to keep electricity prices low in the long run.

Wiring the country for electric service a century ago was too big and too expensive a task for companies to compete with one another. Instead, the utility companies were granted monopoly status and state regulators were charged with keeping a close eye on them. The utilities were to maintain a safe, adequate and reliable power supply for the public while not wasting ratepayers’ money.

In exchange for this government scrutiny, the utilities received a guaranteed return based on their investment in generators, wires and other equipment.

Trouble was, in Pennsylvania and virtually everywhere else, utility regulators were seen as lapdogs, signing off on a utility’s every expenditure, increasing electric rates and utility profits at the same time. As the head of one southern utility once explained: "This is the only business where I can make money by redecorating my office."

John Hanger began preaching new ideas as a Pennsylvania Public Utility Commissioner in 1994. His message was blunt. "We’ve done a lousy job, frankly," he said more than once. Introducing some free-market competition was better than continuing the disaster of total government regulation, he believed.

In another age, breaking up the country’s electric utility monopolies would have been deemed too radical an idea. But in the 1990s it fit in well with the Republican Party’s increasingly popular call for smaller government and less interference with business.

By 1996, PUC Chairman John Quain, at the behest of Gov. Tom Ridge, was meeting with Pennsylvania utilities, outside suppliers, consumer representatives, environmentalists and others to create a plan for restructuring the industry.

Ridge put his full weight behind the effort on Nov. 18, 1996. With the support of Democratic mayors Tom Murphy of Pittsburgh and Ed Rendell of Philadelphia, Ridge called on the Legislature to quickly approve the proposal the group had hammered out.

Fifteen days later, he signed the Electricity Generation Customer Choice and Competition Act into law. Within months, Pennsylvania had the most active competitive electric market in the country, a quarter-million customers searching out the best offer from among dozens of suppliers.

Oh, some objections were raised. The Utility Workers Union of America, fearing that increased competition would lead to fewer jobs for its members, embarked on a public awareness campaign arguing that the system wasn’t broke, so there was no need to fix it.

But in Pennsylvania, at least, the train had already left the station.

Introducing competition "is the single most important state law affecting business and economic development that has been passed by the Legislature in the past 20 years," said Hanger, who is now a senior fellow at the Center for Competitive Markets think tank.

Indeed, representatives from the Building Owners and Managers Association of Pittsburgh of Pittsburgh, the International Mass Retail Association, the Greater Pittsburgh Hotel Association and others gathered in February to send the PUC a pointed message not to cave into utility interests as it wrote the rules to put the law into effect.

"We are working hard to encourage the restructuring of the electric industry in Pennsylvania which will ultimately lead to a competitive environment and growth of Pennsylvania’s economy," said Andy Gawlas of Kaufmann’s Department Stores, representing the Pennsylvania Retailers Association.

Today, 3.5 million Pennsylvania business and residential customers have the chance to choose a new electric supplier in order to start seeing lower rates in January. The rest of the state’s 5.2 million electric customers will have to wait until 2000.