Nowhere are the failings of traditional utility regulation more evident than on Long Island. The New York Public Service Commission (PSC) has raised rates for the Long Island Lighting Co. (LILCO)...
Rural Electric Tries a Little English
We're paying interest on ours. They're not paying a blooming dime on theirs.
"Everybody knows that we have subsidies. What they don't know is they have subsidies."
English says a single case provides the strongest argument. "Pull out Consolidated Edison and see what they paid in ... 1993. ... Not a dime. In fact, they got a $25-million tax break. They had $5 billion in revenue. Five billion dollars. And those guys are getting $25 million back from the federal government?"
English says that NRECA could be more vocal on the subsidy issue, but that legislators haven't called for an emphatic response. "We have not seen Congress, Republicans in Congress, Democrats in Congress, attack us on these issues," he says. "What we've seen is IOUs raising these issues before the Congress."
Not all the issues facing NRECA are external. For instance, while most of its members oppose retail wheeling, some favor it. English says residential users are vulnerable and will likely subsidize competition with big loads: "We don't like that." Yet, he adds that, like the Edison Electric Institute, which is funded largely by IOUs, "we have members who it doesn't scare a bit. [But] we think consumers are going to get burned. They're going to get burned bad."
Regardless of what NRECA and its members face, the primary issue will always be to keep rates low. "That's one that I think the Congress is going to have to come to grips with," English says. "The enthusiasm seems to be cooling just a tad out there as regulators finally become aware of the fact that 'Hey, somebody's bills have got to go up as the bills for the big users are going to go down.'"
English says we can't have universal service and total deregulation. "You'll probably have some hybrid system that does not work well, and then raises real questions: Why are we doing this? Are we changing so we can say we changed something? Is this in response to the fad of the times? We used to have bell-bottom pants, but I don't know that everybody wants to go to bell-bottom pants. This might be one of those passing fads."
One facet of keeping rates low are mergers. Mergers among co-ops or co-ops and IOUs are being strongly and widely considered. The National Rural Utilities Cooperative Finance Corp. was assessing 65 deals, in various stages, in 1995.
English says most mergers that have come through have been in service areas big power companies don't want; co-ops are only taking over or merging with territories on the periphery of larger service grids. He says mergers don't conflict with the original mission of association members to provide power to consumers and those who own a cooperative. "There was never ... anything along the lines that you should only have so many people in cooperatives," English says. "You've got people who say, 'We can be more efficient if we do this.'
"If there are savings to be gotten by merging, that is very attractive to the consumers out there, because it means they