OK, Pennsylvania is deregulated-now what? Featured

10:05am EDT July 22, 2002
A year into the process - as Pennsylvania becomes one of the first states in the nation to tackle the complexities of electric competition after decades of reasonably routine regulation - "What's next?" is a question, no doubt, on the minds of many business owners.

That goes especially for small businesses that may not have the wherewithal to hire lawyers and accountants and other consultants to guide them through the new process as it slowly emerges, and changes, sometimes almost daily.

But at this stage of the process, "What's next?" is a tough question to answer.

We do know one thing: In January, 1999, at least one-third of all retail electric customers in Pennsylvania-and possibly two-thirds-should be able to choose their electric-generation supply from one of more than 30 companies licensed to sell kilowatt-hours in the Commonwealth.

And by January 2001 - possibly by January 2000 - competition and customer choice, barring protracted legal challenges or legislative review, should be a reality for all retail customers, from individuals and small businesses to large industrial complexes.

What we don't know yet for sure is the outcome of all state-mandated rate-restructuring cases involving all eight Pennsylvania electric utilities, under the jurisdiction of the Public Utility Commission, that will basically determine "What's next?"

In PECO Energy's case, for instance, the company reached a settlement agreement after extensive negotiations with a wide-ranging group of consumer representatives, including the Commonwealth's Office of Consumer Advocate and Small Business Advocate and a coalition of industries.

So what's next? The agreement guaranteed all customers in PECO Energy's service territory, residential and commercial, a 7 percent to 10 percent rate decrease on Sept. 1, as well as rate caps for an additional 10 years.

The PUC, however, by a 3-2 vote, rejected the agreement, known as the Pennsylvania Plan, and instead imposed on PECO Energy a restructuring order of its own.

The order guaranteed no rate reductions for anyone, but projected that customers, through carefully shopping for low rates among the many electric suppliers brought to the state by competition, could eventually save up to 15 percent on their yearly electric bills. Yet, those who decline to shop get no rate reduction at all.

Consumer groups such as the Consumers Education and Protective Association in Philadelphia strenuously objected, saying that, while large, out-of-state sellers and marketers of electricity were guaranteed substantial profits by the PUC action, Pennsylvania consumers were guaranteed absolutely nothing.

CEPA pointed out that, in every other state involved in electric deregulation, consumers were guaranteed a rate reduction.

PECO Energy filed challenges to the order in both state and federal courts.

So what's next? At least for now, the PUC has scheduled talks among all parties to the PECO Energy case, in an effort to settle the legal issues and move the deregulation process forward. Barring a settlement, the case goes first to Pennsylvania Commonwealth Court and then, possibly, to the U.S. District Court for resolution.

That resolution could take months, or years, unlike the Pennsylvania Plan which, if approved by the PUC, would have been implemented in September.

However, whenever competition and customer choice actually is implemented in Pennsylvania-and it ultimately will be-small businesses should be considering several strategies:

One is to carefully follow the implementation process, in the media, through publications like this one, and through communications from potential electric suppliers. If you haven't already, eventually you will have to make a choice, and given the more knowledge you compile before doing so, the better choice you can make.

Another is that you will be able to band together with other small businesses-known as aggregation-to negotiate electric-supply rates with electric companies or marketers (see related article in this section).

It all still may seem pretty confusing-and unless you deal with it every day, it is-but remember, it's not going to happen all at once, overnight. Telephone deregulation is in about its 10th year now, and it's still changing. You are still being presented with more and more choices as technology evolves and improves.

The implementation of electric deregulation probably will be somewhat the same. One local retailer probably says it best, in that, as the process evolves, an educated consumer is the best consumer.

J. William Jones is manager of media relations at PECO Energy Co.