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Perspective

Fortnightly Magazine - May 15 1996

may not be further divided. Simply put, it may well prove impossible to reach the latter phases of the Order. As the British found:

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"Providing access for a few hundred or a few thousand large customers is easy . . . extending access to tens of thousands of medium-sized customers is complex. The result was a data shambles."3

If California holds true to form, small users there may come to learn first-hand the dictum of the slave of Ancaeus: "There's many a slip twixt the cup and the lip."

Inequities

A number of subsets of the population may be especially vulnerable to changes associated with retail wheeling:

Small Businesses. The general consensus assumes that large industrial users will benefit most immediately and directly from retail wheeling. In fact, the phase-in structure of such proposals as the CPUC Order will institutionalize these benefits at the expense of smaller businesses. Many proponents of retail wheeling argue that large firms "need" lower electricity costs to "be competitive."

Yet, if job creation serves as a real goal of retail wheeling, this focus on large firms at the expense of smaller businesses provides a sad irony. Economic development scholars have thoroughly documented the importance of the small business sector in job development.4 Large firms generate the headlines, but small businesses create the jobs. To the extent it interferes with this process, retail wheeling will indeed impose adverse socioeconomic impacts.

At-Risk Customers. The elderly may lie at risk in a retail wheeling environment because they may lack the expertise or flexibility needed to take advantage of the supposed benefits of "customer choice." Lisa Crutchfield, vice chair of the Pennsylvania Public Utility Commission, is one who has raised concerns about the impact of retail wheeling on older citizens.

Minorities, too, may face many of the same difficulties as the elderly: They may be unaware of opportunities, unable to take advantage of sophisticated information, and inadequately organized to form aggregates. In addition, minorities may suffer from the impact of racism on quality of service in a deregulated environment. To anyone who doubts that elitism and racism play a role in the retail wheeling debate, I say: Who do you think the "last resort" customers are?

Rural Residents. In 1935, rural cooperatives helped to pioneer the concept of universal service. At the time, many utilities did not want to serve rural areas because of the low-density population and the difficulty of accessing remote regions. Under a retail wheeling environment, however, various utilities or other generators could cherry-pick the most attractive customers of a rural cooperative. Since cooperatives often serve only one or two large customers - e.g., a ski resort - rates for native load rural customers could rise to offset lost revenue. To put the magnitude of this potential impact in perspective, cooperatives (a) serve about 12 million customers in 46 states, and (b) maintain about half the distribution lines in the nation.

Industry Issues

A host of other socioeconomic factors remain unaddressed by the retail wheeling paradigm:

Utility Cooperation. For decades, utilities have cooperated in crises, sharing data,