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  Pennsylvania is ahead of the game By Ken Zapinski, Post-Gazette Staff Writer State regulators have been feeling pretty good as of late, saying that Pennsylvania has done better than any other state in opening its electric market to competition.That pride is warranted, according to industry experts. Other places have tried, but none have succeeded as well as the Keystone State. "Pennsylvania is the most active market in the country," said Tom Michelman, a senior consultant XENERGY Inc., a Massachusetts energy consulting firm. For Michelman and others, a good grade does not come just from cutting rates for consumers. Pennsylvania regulators and lawmakers, along with economists, suppliers and others, want programs that create robust electric competition. They believe that market competition — not government fiat — is the best way to achieve and maintain lower electric rates. Duquesne Light customers, currently paying some of the highest rates in the nation, stand to save 10 percent or more on their electric bills — but only if they’re willing to shop around. Allegheny Power customers, whose rates are already much lower than Duquesne Light’s, can expect more modest savings. At the federal level, the Clinton Adminstration is advocating that all U.S. electric customers be able to choose their supplier by 2003. A nationwide market with at least some common guidelines might make it easier for outside suppliers to provide competition to local monopolies. Restructuring legislation has been introduced in both the House and the Senate. Individual states, including Ohio and West Virginia, are pushing forward on their own. Here's a snapshot of what’s going on in some of the most significant states where deregulation is advancing: California was supposed to be the shining example for the rest of the nation when it opened its market to competition on Jan. 1. Instead, it's been a flop. First, technical difficulties delayed the start for several months. Then, when everybody had the chance to switch suppliers, almost nobody did. That's because all utility customers enjoyed rate cuts, whether they stuck with their same company or went with a new supplier. And the rules made it impossible, industry experts said, for a supplier to cut prices below a utility's rate and still make a profit. Experts say those same restrictions do not exist in the Pennsylvania program. California customers aren't happy. The rate cuts are the result of refinanced utility debt, which means customers will be paying for today's lower rates for years to come through charges on future bills. Disgruntled residents have placed a referendum on the November ballot to overhaul the program. Massachusetts voters will also face a referendum to repeal reform legislation that took effect March 1. There have been 10 percent utility rate cuts but little real competition. That's because state regulators set a "standard" price for power that is lower than the going wholesale market rate. As in California, suppliers can’t sell for less than the utilities and still make money. While customers are enjoying the below-market rates now, opponents worry that there won’t be a truly competitive market established to help hold down rates once the regulatory caps expire. New York has no statewide program. Each utility is developing its own rules and phase-in schedule, subject to regulatory approval. Some will offer their customers choice by the end of this year. Others will wait until 2001. Some customers will receive guaranteed rate cuts of 10 percent. Other residential customers are expected to save only 2 percent.
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