Dominion Virginia Power said droves of large industrial and commercial customers have volunteered for one of its three electric choice pilot programs, which will allow customers to buy power from alternative suppliers beginning in January. However, all those eager customers may end up having to stick with regulated utility supply service because so far no suppliers have shown any interest — a problem Virginia has had all along with its retail competition programs.

Customers apparently are hoping this pilot will draw attractive competitive service offerings. The pilot currently has “more volunteers than open slots,” said Dominion Virginia Power CEO Jay L. Johnson, “so we will be conducting a lottery to select the participants on Dec. 15.”

The pilot program is limited to 200 MW, but so far 734 customer accounts, representing total electrical demand of 635 MW, already have signed up to participate. Dominion said it will continue to take volunteers for the commercial and industrial pilot, which is one of three approved in September 2003 by the Virginia State Corporation Commission. Customers can sign up at the company’s web site, www.dom.com, or by calling (888) 667-3000.

Two other retail access pilot programs also will be introduced, making up to 300 MW of load from a variety of customer classes available to competitive service providers. Participants from anywhere in Dominion’s service area will be able to shop for and secure electricity from competitive suppliers — that is, if they can find any.

Only three retail suppliers are certified for Dominion’s residential choice program and none are active. The 2,300 customers that have switched to a competitive supplier went to Pepco Energy Services under its renewable, or green power, offering, but Pepco stopped taking customers last year. So far, no competitive retail suppliers have signed up for the commercial and industrial pilot.

The main problem has been the wires charge, or stranded cost charge, that the utility levies on customers who switch to alternative suppliers. The charge is based on the difference between the market price of power and Dominion’s generation cost of service. Competitive suppliers say the wires charge eliminates their margins and makes it impossible to compete with utility supply service, which is under capped rates until July 2007.

Dominion has agreed to cut the wires charge by 50% in order to stimulate competition. It remains to be seen whether a 50% cut will be enough. It takes about 30 days for a retail marketer to be certified by Dominion. The pilot begins on Jan. 1, 2004. The clock is ticking.

“If it looks like the 50% wires reduction isn’t enough, we’ll have to go back to the drawing board to try to create enough headroom so that suppliers can compete,” said David Holt, pilot program project manager at Dominion. He admitted that all the customers currently scrambling to switch to competitive service, may end up empty-handed. “That could happen if we don’t have enough head room for suppliers. We’ll just have to take that under advisement and try to create a situation where there will be some headroom for them.”

While Compass Energy Services Inc. currently does not market electricity, the Richmond, VA-based gas marketer said last week it is considering joining the Dominion Virginia Power pilot (see related story). “What most people don’t realize is that Virginia actually is a deregulated market, there’s just nothing going on here. There aren’t any marketers that can come in and get underneath the Virginia Power pricing right now,” noted Compass President Chris Ziegler.

“What will remain to be seen is that once they [cut the wires charge], will the suppliers be able to get in-between and make a little profit for themselves. I don’t get the feeling that, unlike say five years ago, there are a lot of suppliers that will come in here to take a loss just to sell some electricity.” He noted that the days of going into a market to lose money and hope to turn it around over time have disappeared.

Retail competition in Virginia must be firmly established before July 2007 when rate caps are lifted and the market will set the price that all customers pay for their power. The wires charges also will be removed on that date.

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