The debate today in many state capitals is whether electric restructuring will help or hurt the residential and small commercial customer.
Proponents of wholesale and retail wheeling foresee a positive result. They claim that residential and small commercial electric consumers stand to gain as much from competition in electric generation as do large industrial customers with high load factors. Last year, Charles Studness held that residential consumers might see rate cuts as deep as 30 to 40 percent in many areas after retail wheeling (PUBLIC UTILITIES FORTNIGHTLY, Nov. 1, 1994, p. 37). He finds no logical reason for great disparities between electric rates within relatively small geographical areas. Others predict that marketers will aggregate residential load and exploit the new-found buying power to win large discounts. In fact, one can find ample evidence in the natural gas industry that aggregating loads can produce savings for small consumers.
Yet many groups (em consumer advocates, and environmentalists (em claim that retail wheeling will harm the small customer. They assume that residential and small commercial customers will be forced to remain tied to the rate base, while the seemingly more attractive industrials flee to competitive markets. Opponents of retail competition claim that small consumers lack enough market clout to reap benefits from open markets and will instead be forced to absorb all the high costs abandoned by the large industrials.
While the debate may continue, the outcome is not in doubt. Small customers are aggregating load even now, as shown by this real-life case from rural North Carolina.
Rural Origins