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Retail Aggregation: A Guaranteed Right for Small Customers?

Fortnightly Magazine - April 15 1996

all about. You can't go crying anymore."

The fight for aggregation won't be easy, Benincasa believes. "The utilities are going to say one thing, we're going to say the opposite, and we're going to prove it."

That tactic, says LILCO spokesman Jim Cunningham, will only repeat the history of the Shoreham nuclear power plant, a bitter, litigious struggle with consumer and other groups that simply delayed the plant's opening for six and a half years. Current rates reflect the $3 billion in debt that accumulated while the plant lay idle.

"Our view is, we don't want to have to fight the whole way," says Cunningham.

However, LILCO believes aggregating retail loads is inconsistent with the intentions of the Energy Policy Act. "We think a lot of the benefits of competition can be captured at the wholesale level," Cunningham says.

According to Cunningham, the irony of the Long Island school aggregation is that LILCO's high rates stem from taxes, including school taxes. Without taxes and debt service, he claims LILCO could generate power for between 2.5 and 3¢/Kwh.

Aggregation proposals will have to address fixed costs like taxes, debt, and the costs of running a fourth cable to Long Island to supply power. Cunningham admits that aggregation makes sense and says LILCO is "not opposed to change in the industry" as long as current customers won't be hurt by those leaving the system.

His prediction for aggregation's future: "Anyone who has the impression that this thing is going to happen in a year or two years is wrong."

Lenny Goldberg, a lobbyist for San Francisco's Toward Utility Rate Normalization, is working on a revised plan for aggregation in California. He pulls few punches: "Utilities want no real effective ability for small customers to exercise any power in the marketplace. No effective ability to aggregate on an expedited basis."

It's unlikely that every city will be freed from its utility monopoly in order to cut its own wholesale power deal (see sidebar on page 30). Goldberg insists that cities must be able to form consortia or join with water districts that have significant electric billings. The East Bay Municipal Utility District (MUD), for example, which provides water and sewer services, has about one million people in its territory. "If the East Bay MUD were to take its million people out on the market, they could cut a really good deal," Goldberg says.

His take on aggregation? "I think it's vital that it succeeds. I don't think there's any other way to go." t

Joseph F. Schuler, Jr. is associate editor of PUBLIC UTILITIES FORTNIGHTLY.

E-mail: Schuler@pur.com

Palm Springs Sees the Lite

Long known as a haven for the rich, retired, or notorious (em and perhaps the only American city with a putting green abutting the airport tarmac (em Palm Springs has joined the City of Falls Church, VA, in pursuing the strategy known as "municipalization lite."

In late February, this Southern California city of 44,000 selected five alternative electric suppliers to Southern California Edison Co., hoping to get into the discount power business. The