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Fortnightly Magazine - July 1 1995
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T.R. Standish's letter ("NUGs Take the Cake," May 1, 1995) in response to our article ("How State Regulators Should Handle Retail Wheeling," Feb. 15, 1995) reflects the views of those who believe that the full benefits of competition in the electric power industry do not require retail competition. Mr. Standish, in fact, believes that retail competition is bad and not inevitable. We would like to address several of his points:

Reasonable people can certainly debate the inevitability of retail competition. But unlike Mr. Standish, we feel that competition in the electric power industry will penetrate the retail sector. Once competition begins in an industry, it quickly spreads to all facets. We have seen this in the telecommunications and the natural gas industries; there is no reason to believe it will not happen in the electric power industry. We feel that as competition develops in the electric power industry the distinction between wholesale and retail wheeling will increasingly become blurred. The retail seller will face increasing competition from "bargain" sellers, and will, in turn, pressure the retail utility to tailor its services to the individual needs of customers (em which, in essence, is what retail competition is all about.

E We agree that small (core) customers should not suffer from retail competition. In fact, we believe that if retail competition is to be socially desirable, all customers should have the opportunity to benefit. We disagree with Mr. Standish and others that retail competition is merely a ploy of industrial customers to shift costs to other customers. Clearly, industrial customers will benefit from retail competition. We believe that retail competition will enhance pressures to improve the overall economic performance of the electric power industry.

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