s Cherry Picking

"If we ignore history, we're doomed to repeat it. And what happened in the natural gas industry is precisely what will happen. The FERC authorized deregulation of the natural gas industry and, as a consequence, today's retail consumers (em meaning residential retail consumers (em are paying more than twice as much for natural gas as the large industrial users.

"I'm looking at Pennsylvania, for example, and the gas companies are selling gas to the industrial users, based on 1994 figures, at $4.03 per thousand Mcf, versus residential at $8.22.

"It will happen [in electric] unless the regulatory commissions do something about it. They could solve that problem by allowing retail wheeling only for residentials, and when they get it on line where it's effective, do it with industrial and large commercial users."

s Customer Transition Charges

"We think all stakeholders should pay. If you're going to have stranded costs, we think they should be shared by the stockholders as well as all the users (em those that exit the system as well as those that stay on. . . . It's hard to draw the line, so we're saying at AARP that all stakeholders should share those costs."

s Retail Wheeling

"Yes, they need it to get lower costs. . . . Retail wheeling conceivably can produce true competition, if you follow it carefully.

"[Customers] don't understand this concept at all, anymore than they understand gas. Let me tell you this right now. If the general public in the United States understood what has happened with the FERC deregulating natural gas and allowing large users to pay half as much as residential consumers, there'd be a revolt. And not even the members of Congress know that. The same is going to be true with electricity.

"I think they're out of touch, frankly, at the FERC."

s The Environment

"We have to go on the assumption that whatever method is used is going to be more environmentally friendly, and we support that philosophy.

"Natural gas is being used more and more in creating electricity. And that is not coal and that is not nuclear, that is a clean fuel. So the state of the art is such that you can have a friendly environment with regard to electricity. . . . That has to be a caveat." t

John McManus is chairman of the Consumer and Housing Committee of the AARP's National Legislative Council. AARP represents 33 million people over the age of 50. Among his elected or business posts, Mr. McManus was a borough councilman for 20 years. He has owned McManus Heating and Refrigeration Co. in Pittsburgh since 1950.

s Cherry Picking

"I do not think that will result in the retail or smaller customers paying for that advantage. On the gas side, since there's some history there, you can see that clearly the industrials have saved the most,

as much as 40 percent, in that

class of customers. But at the retail level, there have been savings of 25 percent. So it is universally across the board. And I think that's important to have a successful deregulation and competitive market (em that the entire market, all classes of customers, have to be able to push toward benefit, not just a segment of them.

"It is the momentum of the industrials that will make deregulation move quicker to retail than not."

s Customer Transition Charges

"I guess in a pragmatic way, I look at that as something that's going to be a political solution as much as it's going to be one shared by customers and shareholders alike. Now, how it's done (em transition-cost fees or other solutions (em is very much up for discussion and debate right now, and I don't particularly want to jump into that one."

s Retail Wheeling

"They do. And I think very much that they want it. The idea of being able to choose your energy supplier and to choose pricing scenarios that fit the way you live are things that are of great interest.

"Through the experience we've had with our national brand name, EnergyOne, and literally traveling the country . . . there is a great feeling to have the power to choose and not simply to take what's delivered at your door.

"There is a great bit of education going on. People at the commercial level in the smaller businesses don't really understand that choice is something they have. And I think one of the main reasons is the patchwork process of deregulation that we're going through."

s The Environment

"I don't think the environment will be harmed in any way. In fact, I believe there will be benefits that will come to the environment, simply because you're looking at the injection of efficiencies that would never be conceived in an industry, and technologies that would never be conceived in an industry without opening it up to full competition and other players.

"I think the situation with generation is such that many people are going to look for alternatives and not necessarily build as much." t

Richard C. Green, Jr. is chairman and CEO of UtiliCorp United, Inc., a $3.9-billion global energy company based in Kansas City, MO. UtiliCorp's EnergyOne brand is considered a "consumer friendly" energy service. UtiliCorp plans to merge with Kansas City Power & Light Co., creating a $6.4-billion organization.

s Cherry Picking

"I'm not sure retail customers would pay more than they would without competition. In part that depends on how the residual monopoly market gets regulated. It's certainly true that the large industrials are going to have more buying power. But I'm not sure in the long run that it's going to make much difference. In England, for example, large industrial customers ended up paying higher rates than was anticipated.

"Part of it depends on how quickly competition gets spread and how its gets spread. But my guess is in the long run you're going to see load aggregators appearing, although they haven't in natural gas. . . . In fact, that could end up being part of the conditions that could be imposed on retail [electric] competition."

s Customer Transition Charges

"If there are going to be CTCs, it seems to me everybody's paying the embedded costs, the existing rates. They're already paying what becomes the stranded asset in a competitive regime. So if you impose that charge on a nondeparting customer, that's like imposing the charge twice.

"Now, as to whether there ought to be CTCs . . . that's a whole different subject. There are some clearly some stranded benefits issues that have to be addressed first . . . but the idea that a utility is entitled to 100-percent recovery of its stranded assets is . . . basically saying, 'You should have been a slob, you should have been a sloth, you should have been wasteful, we're going to reward you for it. If you've been efficient, you're going to pay a penalty.'"

s Retail Wheeling

"I don't sense any great outcry on their part for it. . . . Basically, they're indifferent to it."

s The Environment

"It isn't entirely clear to me as to what the results are going to be. I've heard arguments that this will benefit nuclear power, and variants that it will hurt it. I've heard similar arguments vis á vis coal. . . . If environmental decisions are important to the consumer, I'm sure among the opinions they'll be offered is green pricing, like 'dolphin safe' tuna.

"I know there are people on the East Coast who are convinced . . . it's going to increase the burning of coal and therefore all the coal pollutants are going to increase, and those things are going to blow East. But I also know that the coal people have fears that it will provide more incentives to build hydro facilities in Québec or mean imported power from other areas." t

Ashley C. Brown is executive director of Harvard University's Electricity Policy Group in Cambridge, MA, which develops alternative strategies for the transition to a more competitive electric market. Mr. Brown also is a consultant to Hagler Bailly and has served on the Ohio Public Utilities Commission.

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