One year into electric deregulation, the benefits promisedconsumers by the California legislature have failed to materialize,making monopoly utilities the primary winners in the state’sderegulation game, according to San Francisco-based The UtilityReform Network (TURN), the state’s major utility consumer group.

The state’s large industrial customers, labor unions, bigutilities and some major environmental groups are hailing theone-year mark as proof competition works, claiming residentialcustomers are saving at least 10% on their electricity bills andthere is more to come in the future. But TURN claims smallconsumers scored zero on savings, despite the “legislated 10% ratereduction” appearing on their bills. The rate reduction, financedby consumers through a transition charge, is actually about 2%, farless than consumers would have seen had generation regulationremained, TURN said. “And consumers must pay inflated rates for 10years to pay off the bonds sold to pay for the minusculereduction.”

TURN maintains fewer than 1% of California’s residentialcustomers have switched electric companies, despite the $80 millionthe CPUC awarded to utilities to explain deregulation and millionsmore spent by would-be competitors on sales and marketing. Theutilities have collected billions in accelerated recovery onunprofitable investments.

“There was lots of talk about the incumbent utilities being’poles and wires’ companies only, but now we’ve got these sameutilities acting like they want to be the major purchasers ofpower-and not through affiliate energy service providers (ESPs),”said Nettie Hoge, TURN’s executive director.

“I don’t think the legislators or regulators thought too muchabout the end of the transition period [when competitive transitionsurcharges are all collected] when there might be no more powerexchange.”

Even though TURN has its reservations about the PX, Hoge saidthe consumer group may have to fight hard to keep the PX inbusiness and to maintain the requirement that the utilities buytheir power through it. Marketers such as Enron have long arguedthe PX is unnecessary in a competitive power generation market.

“So what does that open up? It opens up Enron coming in andcomplaining about an integrated monopoly doing all the purchasingfor the default market and it’s not through the power exchange, sowhy shouldn’t these customers be auctioned off? I see a great dealof potential for that to go down the road of placing all the riskon the customers who decide to stay with the utilities.”

Joe Fisher, Houston; Richard Nemec, Los Angeles

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