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News Analysis

Fortnightly Magazine - November 15 1998

four-month phase-in should the utility companies need it. Both bills also call for a minimum 5 to 10 percent rate reduction, unbundling of customer bills, and recovery of, and the ability to securitize, stranded costs.

Under the legislation, utilities would be able to recover all stranded costs that cannot be mitigated through "all reasonably available measures." Stranded costs would be recovered through a market transition charge, or MTC, and could include costs for nuclear decommissioning, as well as environmental expenses and BPU-approved social programs.

Elizabeth Ard, GPU Energy's vice president of government and regulatory affairs for New Jersey, while emphasizing the company's desire for the start of competition, has concerns about the legislation. According to GPU spokesman Ron Morano, Ard is referring to potential restrictions on the work that can be performed by utility personnel and employees of their marketing affiliates. GPU Energy is concerned that utilities outside the state will have an advantage.

"Language is the big issue," says Morano. "Let's work on completing this part so we can move on to the next stage."

Meanwhile, the Coalition for Competitive Energy has come out against the legislation, saying that consumers should not have to pay for 100 percent of stranded costs. The Board of Public Utilities is hopeful that legislation will be passed this year, allowing for six months to educate the public. A public education program, however, is already underway.

Ohio (em Delaying Tactics. Bills introduced into the legislature on March 26 by Sen. Bruce Johnson %n13%n and Rep. Priscilla Mead %n14%n call for customer choice to begin Jan. 1, 2000. Under the bills, the state would be divided into temporary retail marketing areas, or RMAs, which are designed to reduce the potential for market power abuse during the five-year transition period. Those electric customers who don't choose a generation supplier would be served by the auction winner of that particular RMA. Both gubernatorial candidates support, at least in principle, the Johnson and Mead bills.

On Aug. 11, however, Ohio's major investor-owned electric companies answered a request by the General Assembly and introduced their own proposal. It would delay customer choice until Jan. 1, 2001.

Senator Johnson doesn't think the utilities' proposal is an improvement over his. "It looks like a plan not to compete," he said.The utility proposal leaves the option open for the companies to securitize their transition costs, so long as the rates to customers don't increase. The proposal includes a five-year transitional rate freeze while consumers become familiar with competition. The proposal also states that tax reform be designed to avoid a decline in utility tax revenues, a primary funding source of school districts. The tax issue remains an important one, as Ohio voters in May decided against a 1-percent sales tax increase, which had been intended to raise money for school districts.

Anticipating competition, the Public Utilities Commission in July approved new consumer protection standards. %n15%n The standards include several service time limits, such as a requirement that companies test a customer's electric meter within thirty days of a request.

Oregon (em Jury Still Out.