January 8, 1999
Farmers don’t want leftover electric rates
RICHMOND—Electric deregulation is likely, but will commercial
users and city dwellers buy up cheap electricity, leaving rural
residents with higher rates?
That’s a question agriculture leaders and some in the electric
utility industry are asking. State lawmakers will consider a proposal
to deregulate the electric utility industry during the next Virginia
General Assembly session, which starts Jan. 13.
Electric rates already dip as low as 5.5 cents per kilowatt hour
in parts of Virginia. The average is 8.5 cents in the Old Dominion,
said Mark Tubbs, manager of governmental affairs for the Virginia,
Maryland and Delaware Association of Electric Cooperatives. That
compares with rates as high as 13.5 cents in New Hampshire.
“Some people don’t see the potential for cost savings with deregulation
because Virginia is already a low-rate state,” said Mandi Smith,
a legislative specialist for the Virginia Farm Bureau Federation.
A large multi-state electric power company could conceivably raise
rates in one state so it could lower rates in another state where
rates are high, said VFBF President Bruce Hiatt. “Anytime you
have regulation of something, it’s there for a reason. The rural
areas are benefiting from it now. If it’s taken away, you’re open
to exposure to possible increases in rates.”
A drafting committee of lawmakers has received input from advocacy
groups, such as Farm Bureau, to use in drafting a deregulation
bill for introduction in the upcoming session, Mrs. Smith said.
A big concern among agriculture leaders is that rural areas may
have limited options to shop around for low rates. Yet, commercial
users and city dwellers probably will have many choices because
their density per mile makes them more attractive to utilities,
she noted.
Another concern that shouldn’t be a concern at all is maintenance
of the distribution system and restoration of damaged lines after
bad weather, Mrs. Smith said.
The local electric utility company that now maintains lines will
continue to do so. The State Corporation Commission will continue
to regulate that part of the industry, said Eva Teig, senior vice
president of external affairs and corporate communication for
Virginia Power.
Only the generation and selling of electricity will be deregulated.
Generation of electricity accounts for about 60 percent of a power
bill, Ms. Teig noted. “If you subject the generation part to competition,
you can have an impact.”
Old Dominion Electric Cooperative generates, buys and sells electricity
to member-owned electric cooperatives in Virginia, Maryland and
Delaware. “We’re being very active in the legislative process
and the writing of restructuring legislation,” said ODEC President
and Chief Executive Officer Jackson E. Reasor, a former state
senator.
“We want to make sure Virginia does not move too quickly,” Reasor
said. “We also want to make sure Virginia puts a good process
in place and that there are consumer safeguards in the legislation
and that the legislation is not only protective, but fair to all
parties.”
Contact Mrs. Smith at 804-784-1365 or Tubbs at 804-968-4084. |
