You've heard talk lately about the convergence of electricity and natural gas. That idea has grown as commodity markets have matured for gas and emerged for bulk power.
"This legislation represents a piecemeal approach to a problem which requires deliberate and thoughtful consideration .... [It] could lead to 'cream-skimming,' which would result in increased rates for the remaining business and residential customers" (Lincoln Almond, Governor of Rhode Island).
Words to this effect are likely to grace vetoes of retail wheeling legislation by governors and maybe the President of the United States for the foreseeable future. Too many people trying to push the deregulation envelope in the electric power industry are leaving small customers, and the ability to profit by serving them, out of the equation.
Unless deregulation enables households and small businesses to shop for power, direct access isn't going to materialize. And that means that opportunities to make money and create genuinely value-added products and services could be delayed indefinitely. That's bad for suppliers, marketers, and customers of all shapes and sizes.
We can wade through the many proposals emerging from states and special interest groups and the patchwork of state deregulation blueprints. And we can continue meeting through venues such as the DOE/NARUC Electricity Forum ad infinitum. Or, stakeholders can begin articulating a plan to speed up the transition to a more competitive and value-driven energy market for all customers.
Rhode Island Gov. Lincoln Almond vetoed retail wheeling legislation last year because it would have exclusively benefited large industrial companies. And if California's recent decision is any indication, households and small businesses in other states may be left behind.
Which begs the question: When will consumer advocates step up to the plate and offer a plan that realistically advances the debate rather than protecting subsidies for their pet causes? If certain private-sector interests continue to frame the debate without offering any means for small customers to shop, the consumer backlash could stop deregulation cold (em and special interests with it.
None of the major consumer groups (see sidebar on page 15) (em with perhaps one exception (em are prepared to put forth specific ideas to engage commissioners and lawmakers on deregulation. Collectively they appear more bent on stopping the Electricity Consumers Resource Council (ELCON) and Enron Corp. than on becoming part of the solution. More than one consumer advocate willing to tackle the subject admitted, "We're just counting on our friends [in state legislatures and Congress] to stop any retail wheeling amendments."
Consumer groups that lack resources can be excused for hesitating to tackle electric power deregulation. Competition for foundation grants to even study the issue is fierce. And the prospect of nonprofit entities losing their tax-advantaged status (em even for substantive research and advocacy (em is disheartening. But I'd like to think that several groups combined, perhaps with the advice of some far-sighted utilities and power marketers, might be able to devise a win-win-win solution that could at least advance the ball.
Ultimately, retail wheeling will have to pass muster politically. I doubt a single retail wheeling proposal will succeed unless customers of all sizes stand to benefit within a relatively tight timeframe.
I therefore challenge the public and private sectors to put forth a realistic plan