Thursday, March 11, 1999
Bill introduces competition to electric industry
It's called a compromise
BY JOHN McCARTHY
The Associated Press
COLUMBUS — Two GOP lawmakers who have been pushing competition in Ohio's $11 billion electric industry for three years call a plan detailed Wednesday the best compromise they could reach with the dozens of interests that have a stake in the issue.
The plan won't be ready to be introduced in the legislature for another two weeks, Rep. Priscilla Mead of Upper Arlington said. But legislative leaders have said failure to produce a new law by July likely will doom the issue until at least 2001.
Ms. Mead and Sen. Bruce Johnson of Columbus said that doesn't mean that the bill will be rushed through. But Ms. Mead indicated she's watching the calendar.
“There is pressure. We want to get it done by July 1,” she said.
The proposal was the product of seven months of private meetings that seven lawmakers held with about 25 repre sentatives from the electric utilities, consumer and commercial trade groups, schools, local governments, unions and others.
Among the highlights:
• Although the plan would be phased in over five years beginning in 2001, consumers could begin choosing their supplier immediately. The transmission and delivery of electric power would remain regulated under the currently monopoly system.
• Ohio's eight investor-owned utilities would each be given a transition period. During that period, consumers would pay a tax on electricity to help utilities recover their “stranded costs,” debt from investments in nuclear power plants and other projects that is now passed on to rate ayers. The tax and transition period would vary, depending largely on the utility's debt.
• Change the tax structure to allow the utility companies to compete while keeping revenues for schools and local governments. Taxes on property would be assessed at the same rate as most businesses
— 25 percent — while taxes on generating and transmission equipment would be assessed at the current rate — 88 percent.
• Thirty-seven percent of the new user tax would go to a fund to be split at 70 percent for schools and 30 percent for local government.
• Residential customers would be allowed to band together to get power at a cheaper price and customers who refuse to choose a company would be assigned one. If that customer didn't choose by the end of the transition period, the customer would join others in a group whose service would be “auctioned” among the suppliers.
• It would give the Public Utilities Commission of Ohio (PUCO) the power to certify suppliers and hold them accountable for the availability of power.
Mr. Johnson said customer awareness is the key to the plan's success. He said that is especially true of residential customers, who pay the highest prices because they have the least leverage shopping on their own.
He said he realized not everyone would be happy with the plan but that it was the lawmakers could do.
“I believe it is a fair plan that fully compensates the utility companies and their shareholders,” he said.
Robert Snyder, senior vice president of the Ohio Electric Utility Institute, said he would not comment on the bulk of the plan until his staff had studied it.
However, he noted that the 21-page report Mr. Johnson and Ms. Mead outlined contained the term “PUCO” 80 times. He said the plan defeated the stated purpose of its backers.
“If you're going into a free market in deregulation, that's what you should do,” he said.
Gene Pierce, spokesman for the Coalition for Choice in Electricity, a group of large commercial users, said he was not happy about the transition tax but thought deregulation was overdue.
“For the sake of getting competition into the state faster, we were willing to make a compromise,” he said.
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