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Editorial - Getting power by default

November 18, 1997

Editorial - Getting power by default

Pennsylvania is one of the first states in the nation to attempt to deregulate the sales of electricity, so consumers can choose their own power supplier. But what happens if you don't choose? Then your business will go a "default company" designated by the state, based on presentations made before the Public Utility Commission.

And before anybody decides that this is small potatoes we're talking about, consider this: The state estimates that 70 to 80 percent of all consumers will fail to choose when they first get the opportunity to do so, and that no more than half will ever make a choice!

Leaving aside for the moment the question of whether it makes sense to dismantle the existing system when half the users don't care - and maybe never will - the main problem the PUC faces is how to decide whether suppliers vying for default will keep their promises.

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In the Philadelphia area, PECO Energy Corp. settled a dispute with consumer groups this past August by promising that it wouldn't raise electricity rates through 2003. It also promised across-the-board rate reductions of 10 percent through 2000, followed by a 5 percent cut in 2001 and a 2 percent cut in 2002.

Then came Enron, a Texas-based power supplier which applied to be the default supplier for PECO's 1.6 million customers. Its proposal would guarantee a 20 percent rate cut through 2000, with additional cuts of 10 percent and 4 percent coming in 2001 and 2002.

Enron's deal would also pay PECO $5.5 billion in transition costs, and would have PECO issue transition bonds that Enron would buy. PECO claims Enron can't make good on its promises, and that its proposal amounts to a "hostile takeover."

If the state is truly interested in fostering competition, then Enron's intent is beside the point, if in fact it can really cut power costs for Pennsylvanians it serves by 20 percent in the next three years. It's the PUC's job to research that question, to protect all the citizens who aren't interested enough in saving money to do it for themselves.

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