Oklahoma Gets Cold Feet on Deregulation

Oklahoma Attorney General Drew Edmondson has asked the state Senate to postpone the July 2002 deadline for deregulating Oklahoma's electricity market in light of power market problems and high prices in deregulated states such as California, New York and Montana.

Edmondson's letter Nov. 8 was addressed to state Sen. Kevin Easley, sponsor of legislation that would implement an earlier mandate.

"Oklahoma currently has low cost power for its citizens and absolutely no competition in the retail market," stated Edmondson. "Additionally, there is no federal legislation pending that would preempt the state if we fail to act. So, there is no emergency nature to resolving this dilemma.

"I propose that the legislature repeal the artificially set July 1, 2002 deadline and support an in-depth study of not only the considerations of all interested parties in our state, but also the experience of other states, in arriving at a comprehensive program of restructuring."

Andrea Chancellor, a spokeswoman for Public Service Company of Oklahoma, which supplies electricity to 480,000 Oklahoma consumers, disagreed with the attorney general's proposed delay. "If we don't deregulate, certainly the attractiveness of Oklahoma is going to be less. We have 14 power plants that have been announced, or have started to [be built] in Oklahoma. They have come based on the promise of a deregulated environment. A delay could be of some concern and we want to make sure that we are careful on making a decision on the timing."

The deadline for electric restructuring was imposed initially by the Electric Restructuring Act of 1997, which requires separation of power generation facilities from utilities' main lines of business, after which they would be permitted to compete for customers.

Implementing restructuring legislation failed to emerge from the legislature in 2000, but Senate Bill 220 which passed, appeared to be the best compromise at the time, Edmondson said. Since then, Edmondson has reversed his opinion on SB 220, due to recent troubles with electric restructuring in other states.

"Despite the problems that other states are having, Oklahoma's approach is very different," Chancellor said. "We were at a very different starting gate when this race began than where California was when it began. Today we produce more power than we consume and with the added capacity that is coming online, we feel pretty confident that we will have adequate supplies. [California] had not built a power plant in at least a decade, and the infrastructure that they put into place in California really tied the hands of the industry and made it very difficult to have an open market."

Edmondson said in his letter, "This issue is too important to the consumers of this state to promote another last minute solution," he said.

Earlier in the year it appeared as if SB 220 would be reintroduced when the legislature reconvenes in February 2001, but sources said sponsor Easley now has concerns of his own and is reluctant to move forward until discussions can be held with affected groups.

Edmondson said, "In any event, the July 1, 2002 date should be removed to alleviate the pressure to enact a bill before the state is truly ready. There is no benefit derived by our citizens if we make a hasty decision which will, in all likelihood, have to be amended significantly."

"I feel very strongly that, with an economic impact study and this additional time, a plan can be accomplished which will allow competition to flourish while protecting Oklahoma citizens," the attorney general concluded.

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