Va. Power Deregulation Nearly a Done Deal
By R.H. Melton
RICHMOND, Feb. 24 –– Virginia lawmakers ushered in a new and uncertain era of electricity deregulation today by sealing passage of legislation that will allow large and small consumers to shop around for power.
In a lopsided vote that ended one of the most extensive lobbying efforts on a single issue here, the House of Delegates overwhelmingly approved an industry-backed measure that caps electricity rates until 2007, but then opens commercial and residential markets to competition.
Residential customers would see no difference at home when they plug in a television or coffeepot, because the transmission and distribution of energy still would be regulated. But by opening up the generation of power to whatever companies could supply it reliably, rates theoretically could drop as consumers shop around for the cheapest prices.
Several industry analysts said today that deregulation in Virginia should spark the same upstart power companies and benefits produced by deregulation in the airline and telephone industries.
The House vote, which sets the stage for similarly easy final passage in the Senate, was a long-awaited victory for Virginia Power, a lobbying powerhouse in the halls of the General Assembly.
The 24 delegates from Northern Virginia, where Virginia Power has 600,000 customers, voted for the bill; Gov. James S. Gilmore III (R) is expected to sign the measure.
The 77 to 23 vote in the House was a blow to rural lawmakers, whose constituents pay some of the cheapest utility rates in the nation, and to consumer advocates who argued in vain that deregulating a major component of power production was a giveaway to Virginia Power and its giant commercial users.
"Essentially, the General Assembly is writing a blank check to Virginia Power," said Jean Ann Fox, a spokeswoman for the Consumer Federation of America. "There's nothing that benefits residential consumers, and it helps what will be an unregulated monopoly. It's the worst of both worlds."
More than a dozen other states have competitive electricity markets -- Maryland lawmakers are debating the idea -- and power company executives have argued that Virginia must keep pace with changes in the national marketplace.
In a shock to Virginia Power, a House committee tinkered with the legislation at the last minute, giving the state utility commission authority to reexamine rates starting in 2002, but the full House nullified that today by granting the legislature oversight authority.
"There is an exquisite degree of responsibility here," said Del. Robert G. Marshall (R-Prince William).
Del. Clifton A. "Chip" Woodrum (D-Roanoke), the bill's relentless -- and often solitary -- critic, denounced the legislative oversight committee as a "toothless tiger" in the extraordinarily complex arena of utility regulation.
But advocates said the measure was the responsible result of three years of hearings and deliberations, a "tremendous effort at compromise," in the words of Del. Eric I. Cantor (R-Henrico).
"We can't have competition and regulation both," Cantor said.
The addition of the House amendment to the bill passed by the Senate means the legislation must return to the Senate now for what promises to be perfunctory passage. Earlier, the bill passed the Senate, 33 to 4, with three abstentions.
The lobbying on the measure was extraordinary. Groups of three, four and sometimes five Virginia Power representatives roamed the halls of the Capitol and nearby General Assembly Building to baby-sit the bill.
Top corporate officials got into the act, and the company went after both major parties, using well-known Democratic and Republican operatives to coax votes from lawmakers.
Industry analysts predicted that consumers would not abandon their power provider in huge numbers for new "energy service companies" despite fluctuations in their new bills.
"Your bill could go either way," said Donald S. Bradshaw Jr., an analyst at the Yankee Group, a Boston-based research and consulting firm that advises energy companies on growth strategies.
"Utilities are still steady-Eddie monopolies with fixed rates," he said.
Thomas E. Hamlin, a utility analyst at First Union Capital Markets, a research firm in Richmond, said the legislation merely recognized a new economic truth, "that it's no longer necessary for a company that delivers power to manufacture it."
Besides, Hamlin said, Virginia Power has long tried to be an innovator, turning years ago to small "cogeneration" plants and rural and out-of-state suppliers for juice.
Still, others remain skeptical about any long-term benefits to smaller customers.
The Virginia measure "is among the most anti-consumer electric utility bills that we have seen," said Wenonah Hauter, a spokeswoman for Public Citizen, the Washington-based watchdog group founded by Ralph Nader.
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