There's good news on the horizon for average-Joe Utah consumers of electricity. But bad news for large industries that consume large quantities of electricity.
The Electrical Deregulation and Customer Choice Task Force, composed of lawmakers, voted Thursday to allow a yearlong freeze on utility rates to expire, meaning a $20 million-to-$50 million rate-reduction case can proceed before the Public Service Commission.The task force also decided to study electrical deregulation for another year before making its recommendations to the Legislature. That is bad news for large consumers of electricity, primarily industrial concerns, who had hoped for a fast-track to deregulation whereby they could have negotiated their own lower power rates on the open market.
Both decisions, passed overwhelmingly by the task force, came during the final and sometimes contentious 1997 meeting of the task force, which has been studying ways to move Utah's regulated electrical industry into the free market. California, Nevada and Arizona are already moving toward deregulation.
Deregulation would allow Utah Power and its parent company, PacifiCorp, to market Utah electricity to consumers in other states, presumably at higher rates than in Utah, where power rates are among the lowest in the nation. Critics argued that will mean higher rates for Utah consumers.
"Competition may, in effect, trigger the export of relatively cheap, coal-fired electricity from Utah-based generation plants to high-cost states like California and Arizona," said Beverly White of the Committee on Consumer Services. "For the lion's share of Utah customers, deregulation may amount to nothing more than a redistribution of income away from Utah to states who made poor investment decisions in generation technology."
Proponents of deregulation had hoped the task force would at least come up with a target date for deregulation, saying Utah must position itself in the free market to capitalize on lower rates that result from competition.
But representatives of consumer groups, advocates for the elderly and poor, rural and municipal cooperative officials, and regulators unanimously urged caution, saying the task force had not yet resolved critical issues surrounding the deregulation.
Among the groups calling on lawmakers to study the issue further were the Utah Rural Electric Association, the Salt Lake Community Action Program, the Crossroads Urban Center, the Division of Public Utilities, United We Stand of Utah, the Utah Association of Retired Persons and the Utah Associated Municipal Power Systems, as well as the Committee for Consumer Services.
"There is no gun being held to our heads that something needs to happen today," said Mike Peterson with the Utah Rural Electric Association.
Those urging lawmakers to forge ahead were primarily large industries and electrical providers, who were outnumbered 2-to-1 by the other side.
The decision not to pursue specific deregulation legislation dispirited former Rep. Christine Fox, R-Lehi, who pleaded with her colleagues not to lose the current momentum toward deregulation, and to keep the rate freeze in place another year to force PacifiCorp to the bargaining table.
By allowing the rate case to proceed, "we are turning control of this issue over to the PSC," she said.
But the rate freeze was seen by consumer groups as nothing more than a cash windfall to PacifiCorp, which according to the rate case documents has been reaping profits far in excess of those allowed by current law. And to continue the rate freeze another year would extend that windfall - estimated at anywhere from $20 million to $50 million a year.
PacifiCorp had hoped for quicker deregulation to position itself in a competitive market. But, perhaps sensing the lack of public support, PacifiCorp executive Doug Larson told the committee they are comfortable studying the issue another year.