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October 1999 Deregulation Series
Utilities Mull Marketing Strategies
What Role Will Regulators Play?
Who Will Protect the Poor?
More Options for Small Business
Pepco Will Auction Off Its Plants
Environmental Impact Uncertain
An Example of What to Expect
States Deregulate, Congress Debates
Columnists
Cash Flow
Albert Crenshaw says its the same old song. Big business and large-volume users will benefit, while homeowners will likely lose out.

Investing
Investing in utilities used to be easy. Fred Barbash points to where the better investment bets can be found in a more complex, deregulated market.

Color of Money
With deregulation spelling the likelihood of more phone solicitations, commercial ads and legal fine print, Michelle Singletary is tense with anticipation.

Small Businesses Worry About Big Picture

By Martha M. Hamilton
Washington Post Staff Writer
Sunday, October 17, 1999; Page H03

Tony D'Agostino said he's already benefiting from utility deregulation.

As a result of programs in Northern Virginia that allow consumers to choose among competing suppliers of natural gas, D'Agostino said he's saving about $100 a month on his gas bills since he switched to a new supplier. His utility is Columbia Gas of Virginia, but he now purchases the commodity from Washington Gas Energy Services.

"I'm very happy," said D'Agostino, who owns four Northern Virginia pizza parlors. "Don't forget, we use a lot of gas here. We have the ovens — they're gas. The stoves — they're gas. Where we cook the steaks, it's gas. The water is gas, and even the heat," he said, adding that his gas bills in winter have been as high as $1,000 a month.

Generally, small businesses aren't major energy consumers, although as D'Agostino demonstrates, there are exceptions.

As a result, the representatives of small businesses worry that they may not reap the benefits of utility deregulation, when marketers are expected to compete first and hardest for the very large customers.

"We don't see the new competitors out aggressively seeking small business," said Steve Woods, vice president for state public policy for the National Federation of Independent Business.

Jim Goeden, NFIB director of Maryland government relations, said it was important to small businesses that the right to choose among power providers be granted to all classes of customers at the same time, and that is what is proposed in the state under a pending settlement with state regulators.

John Broadway, who represents the NFIB in Virginia, said he expects the state to fine-tune the rules over the next few years before deregulation is expected to get fully underway in 2004. Broadway said government oversight should make sure "that the small consumer, whether residential or small-business, doesn't end up paying extremely high rates because they do not purchase in large quantities."

One solution small businesses and residential users may pursue is aggregation — that is, pooling their purchasing power. Power providers are "out looking for the big users," Woods said. "Until there's aggregation, the guy who runs a bicycle shop on Main Street is not likely to see much benefit, because he doesn't use that much electricity."

It may be that small businesses will eventually be sought after by energy service companies, which offer to manage and reduce a customer's energy consumption in exchange for a cut of the total savings. But those companies are likely to target major consumers of power first because the savings (and the energy service company's take) would be larger.

© 1999 The Washington Post Company

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