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mh 10jan01 - WVA POWER

January 10, 2001

On power deregulation, take time to do it right



Last year West Virginia lawmakers passed a measure to give the state's Public Service Commission the authority to develop a plan for the deregulation of electric power sales. All that was left was for the legislature to approve a resolution in the 2001 session.

But before that happened, the wheels came off California's electric deregulation system. As of Tuesday, Gov. Gray Davis was threatening to seize the plants of wholesalers which gouged customers or utilities. Suddenly, wait-and-see doesn't seem like a bad strategy for West Virginia.

The two states' situations are vastly different, however. California plants don't generate enough electricity to cover in-state needs, and growth in states that normally export to California, coupled with a hot summer and a frigid winter, have led to a power shortage. In West Virginia, citizens and business use only 30 percent of the power generated in the state.

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The state Public Service Commission says deregulation should proceed because under the PSC plan, rate hikes would be frozen for four years and limited for another nine. But David Schwartz, an expert witness brought to testify by the Joint Standing Committee on the Judiciary, said that the cap wouldn't guarantee a stable supply of power down the road.

When Pennsylvania consider deregulation, we took the position that if deregulation's premise - that competition would cut rates instead of raise them - failed to deliver, consumers should be protected. We also said that the state should ensure that hard-to-serve customers in remote areas not be left without suppliers, even if it costs more to serve them.

We've seen the effects of deregulation of the airline and telephone industries, where the open market didn't always serve customers well.

The difference with power deregulation is that electricity is an essential commodity, like water, and that if there isn't some guarantee that it will be available at a price consumers can afford, there'll be chaos. If more study and more time are needed to prevent that, so be it.

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