Utility Users in Anaheim to Get Choice

Ending a 106-year monopoly on electrical service to city residents, Anaheim Public Utilities for the first time today will begin allowing residents and businesses to choose their energy provider.

The move won’t have immediate consequences for residents and businesses, however, because no alternative energy providers have registered in Anaheim. City officials said it would take about two years before all customers are given the option.

Eventually, a competitive market could mean substantial savings for businesses that use large amounts of energy, and it would allow environmentally conscious residents to buy so-called green power.

“I think choice is good for our customers,” said Brian Thomas, Anaheim Public Utilities’ assistant general manager. “It means we have to do a better job to make sure customers still purchase their energy from us.”

Anaheim’s changeover comes two years after the 1996 state-mandated deregulation of the three largest investor-owned electric power companies--Southern California Edison Co., San Diego Gas & Electric and PG&E; Corp.--took effect.

State legislation exempted municipal utilities, such as Anaheim’s, from deregulation. However, it set a deadline of March 31 for entering the open market if they wanted to continue charging customers for previous bad investments--an option also granted to investor-owned utilities when they deregulated.

Other municipal utilities say they have the legal right to impose the extra costs regardless of the deadline. But Thomas said meeting the deadline gives Anaheim extra guarantees it can clear its existing $100-million debt from investments in projects such as the San Onofre Nuclear Generating Station and the coal-burning Intermountain Power Project in Utah.

Once that debt is retired, by about July 2002, rates should come down, Thomas said.

In the meantime, customers’ only hope of saving money comes from alternative energy providers offering cheaper rates. But because the new providers can produce only marginally cheaper energy, “you have to consume a lot to make it worthwhile,” said Robert Michaels, professor of economics at Cal State Fullerton, and a consultant for electricity providers.

The tight market makes it hard for alternative providers to compete in California, said Linda Hensley, director of customer accounts at Sacramento Municipal Utility District. “It’s very difficult for providers to make money,” Hensley said. Sacramento deregulated about three years ago, but it has only one competing provider. And that company sells green energy, renewable energy that sometimes costs more, but appeals to some consumers, she said.

“The bottom line is it will take awhile,” said Thomas, who expects providers will come to Anaheim despite the difficulties. “Competition is good,” Hensley agreed. “Customers are happier when they know they have a choice.”