TRW Flips Switch, Signs Pact With Montana Utility

The deregulation of the California electricity marketplace heated up as manufacturing giant TRW Inc. said Wednesday that it has signed a deal with an out-of-state utility to power its 44 facilities in California.

The TRW move was spurred by a program announced Monday by the California Manufacturers Assn. to provide energy services to its 1,000 members through a contract with the same utility, Montana Power Group of Butte, Mont.

Cleveland-based TRW is the latest and perhaps the largest company to announce a new electricity provider under deregulation, which officially hits California on Jan. 1.

After that, companies and consumers will be able to buy their electricity from not only their utility, but also from any number of energy providers who have already begun clamoring for their business.

The new program by the California Manufacturers Assn., a Sacramento-based business lobbying group that sponsored the deregulation legislation, “represents for California consumers a glimpse into the future of the competitive energy market in California,” said CMA President William Campbell.

Californians pay up to 50% more for electricity than do consumers in other states, the CMA has said. Under the group’s energy program, companies can get discounts of up to 8% off the market price of electricity.

TRW, which negotiated a custom package directly with Montana Power, will switch from its current electricity provider, Southern California Edison, in January.

“We evaluated several proposals and, based on their competitiveness, we selected Montana Power,” said Sally Koris, a spokeswoman for TRW, which employs more than 12,000 people in the state, primarily in Southern California. “When deregulation happens, everyone will have to learn to cope in a brave new world.”

Edison spokesman Clarence Brown said the utility is in the process of auctioning off its 12 gas-powered electricity plants and will become primarily a deliverer rather than a generator of electricity. Because Saturday was the first day that customers could notify utilities of their intention to change providers next year, “now is the time you’re going to start getting those dinner calls” from salesmen pushing electricity.

“What the utility is asking customers to do is to take their time . . . and to read the fine print,” Brown said.

TRW joins the ranks of companies that have already settled on new electricity providers. They include such names as the Robinsons-May department store chain, Rand Corp. and the L.A. Coliseum and Sports Arena--all of which will be buying their electricity from New Energy Ventures, a Los Angeles-based energy reseller.

Montana Power Group, though not a name that is well-known to California consumers, has been providing power on a wholesale basis for more than 30 years, a spokesman said.

“We’re working on final contract negotiations with several major CMA members,” said Frank Rotondi, president of Montana Power Trading & Marketing Co., a member of Montana Power Group.

The CMA program includes Montana Power for energy supply and marketing; Morgan Stanley Capital Group Inc. of New York for customized pricing, risk management and financing; and Carter & Burgess of Fort Worth, which will work with members to improve their energy efficiency.

In designing the program, the CMA received bids from several utilities, including “all of the large incumbent California utilities,” said group spokesman Jeff Gorell. “They just didn’t have the competitive edge that Montana Power did.”