Electricity Buyer, Beware
Judging from the flood of mailers, radio spots and phone pitches about deregulation of home and business electricity, consumers might think they have some immediate choices to make in buying their power. Not so. The real competition is years away and the picture far from clear. Alas, a lack of consumer information--and protections--makes us vulnerable. Let’s face it, who’s ever had to shop for electricity? We can’t see, touch or place a value on a kilowatt.
Some customers of existing providers already are getting a break on their bills, others are not. And some are being hit with increases. It all depends on who supplies your electricity. Consumer education programs are supposed to fill us in, but so far we remain clueless.
That’s partly because California is entering uncharted territory as a result of a 1996 state law that moves toward freeing the monopoly power industry from government regulation. But municipal utilities and investor-owned companies are treated differently. The interests of businesses and homeowners differ, and early reports on rate adjustments have been uneven. As state Sen. Steve Peace (D-El Cajon), co-author of the bill that turned the industry on its head, acknowledges, the goal was not to lower rates overall but to protect California’s economic base.
That means big business and other large users will benefit the most. The California State University and University of California systems, for example, just signed a $300-million agreement to buy power from Enron, a Houston company, in a deal that will save them $15.6 million over four years.
For consumers and small businesses, the immediate and long-term benefits are less clear. Bear in mind:
* These changes are more about restructuring the industry than deregulating it. Utilities generate power, transmit it over wires they own and distribute it to homes. They’ll maintain their exclusive grip on transmission and distribution, but power generation is being opened up to competitors like Enron this year, and they’ll be going after customers of investor-owned Edison, Pacific Gas & Electric and San Diego Gas & Electric.
* Since big commercial and industrial customers have the size to cut the best deals, the Legislature, looking out for the little guy, mandated a 10* cut on the kilowatt-usage portion of monthly bills for homes, apartments and small businesses. But because of variations among localities, not every user will get it. Los Angeles Department of Water and Power customers, for instance, will not be affected now because the DWP is a municipal utility.
* This year marks the beginning of a four-year transition period. Full competition on power does not begin until 2002, a fact that is lost in most marketing material put out by new power vendors.
* So far there has been no big rush by businesses, big or small, to buy power from new sources. Consumers need to be cautious, for switching may save only a few dollars and companies offering low rates now may raise them after they get a big market share.
* The California Public Utilities Commission is assigned to screen and monitor new power vendors, but the agency initially bungled the process. Belatedly, it is cracking down. In separate actions, the PUC and the Federal Trade Commission shut down two companies, accusing them of improper actions in promising cheap power to residential and business customers.
Lastly there is the matter of the PUC informing consumers how to transit this thicket. A promised $73-million state-sponsored public education program has been more image advertising than information. The PUC is late to the plate and will deserve a heap of criticism if it does not get itself together.
