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Power options dwindle
(Published January 10, 2005)

By KATHRYN SINZINGER
Staff Writer

Facing a hefty rate increase next month as deregulation removes electricity price caps, D.C. residents are finding that the city's few alternative power suppliers are dwindling.

Washington Gas Energy Services and PEPCO Energy Services, the only residential options to buying electricity from former regulated monopoly supplier Potomac Electric Power Co. (PEPCO), have both stopped offering standard electricity service to D.C. homes.

"It's hard for us or our competitors and that would be Washington Gas Energy Services to buy electricity on the wholesale market that we can offer to our customers at an attractive rate," said Kim Price, a spokeswoman for PEPCO Energy Services, affiliated with PEPCO's parent company.

"What we're doing is actually saving our customers some money," she said.

PEPCO Energy Services recently began notifying many of its residential electricity customers in the District that their service will be discontinued and switched to PEPCO when their current contracts expire. Service will continue for customers who contract with the company at substantially higher rates for "green energy," electricity produced from wind or other renewable energy sources, Price said.

Under the District's electricity deregulation law, PEPCO was selected by the Public Service Commission to be the default power supplier for customers who do not choose another supplier. PEPCO's electricity rates have been capped since 2001 but will rise an average of 18 percent annually on Feb. 8, a day after the price cap expires. Under deregulation, subsequent rate increases will be based largely on PEPCO's costs for purchasing power generated by other companies.

Officials at Washington Gas Energy Services, a Virginia-based company affiliated with natural gas supplier Washington Gas, said the company is continuing to renew service contracts for current customers but recently suspended offers to new electricity customers in the District.

"Our hope is that we will come up with something that we can offer [to residential customers] that will be a good deal," Harry Warren, president of Washington Gas Energy Services, told The Common Denominator.

Warren said his company, the first to offer power produced by wind energy to local customers, is "working diligently" but without a timetable to structure a wholesale purchasing deal that will allow it to serve new residential customers with competitive electricity rates.

Washington Gas Energy Services, like PEPCO and its affiliate, does not operate electricity generating plants and, therefore, must buy the power it resells to its customers. Warren said a portion of the power being supplied to his company's standard electricity service customers is already being produced by renewable energy sources, well ahead of future government mandates.

"Renewables offerings are not something that standard utility service [before deregulation] was bringing into the District," Warren said.

Both of the District's alternative electricity suppliers declined to disclose how many customers they serve in the District of Columbia. According to the Public Service Commission, the two alternative suppliers together were supplying about 9.3 percent of the electricity load for D.C. residential customers in September 2004.

At least one D.C. City Council member said he is concerned that the District's electricity deregulation law, approved at the end of 1999, has not provided residential consumers with many options.

"The kind of competition that we're seeing is not what we had hoped for when we went with deregulation," said Councilman Phil Mendelson, D-At Large, who until recently chaired the council committee with oversight responsibility for electricity service in the District.

Bills for PEPCO's residential and small commercial customers will increase significantly in February. Because of a variation in winter rates (November through May) and summer rates (June through October), residential bills will increase 26.2 percent on average (based on customer usage) for winter months and 9.2 percent for summer months, according to the Public Service Commission. Small commercial customers will see their PEPCO bills rise an average of 28 percent for winter and 19 percent for summer.

Copyright 2005 The Common Denominator