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Six Pepco competitors await OK

(Published Dec. 4, 2000)

Staff Writer

Electric industry deregulation comes to the District of Columbia Jan. 1 and while six companies have applied to the D.C. Public Service Commission to compete with Potomac Electric Power Co. – including a Pepco-affiliated company – none had yet received approval by the start of December.

A senior staff member at the PSC offered little information when contacted Nov. 30 about Pepco’s prospective competitors but said decisions are expected to be made by the end of December on applications for certification filed by Washington Energy Consortium,, Pepco Energy Services, Allegheny Energy Supply, First Energy Service Corp. and Washington Gas Energy Services.

Officials from Pepco and the PSC both note that consumers need not panic over the coming changes in the city’s electric supply system, because the government is requiring Pepco to continue providing service for at least the next four years to any consumer who does not choose a different electric supplier.

After that, a "supplier of last resort" is expected to be designated by the city through a competitive bidding process to make sure that no electric consumers get their power cut off for failure to choose a supplier.

Perhaps the major change most consumers will become aware of initially is that Pepco will begin billing all D.C. electric customers for transmission and distribution charges, regardless of whether they continue to buy their power from Pepco. While deregulation means consumers will be able to choose what company sells them electricity, Pepco will continue to operate as the monopoly owner of the transmission lines that deliver the purchased power to D.C. consumers’ homes and businesses.

Local consumer advocates, who opposed the plan to break up Pepco’s monopoly status as the city’s electric supplier, say they aren’t particularly worried that the local deregulation era appears to be beginning slowly.

They point to unexpected outcomes of deregulation in California, where power distribution companies are now asking to be released from agreed-upon caps for consumer rate increases due to the unforeseen high prices they are being forced to pay to purchase electricity that their own companies no longer generate.

And they also point to Maryland, where the expected competition for residential electric customers has not materialized. Pepco officials recently said the company has lost only 5,000 Maryland customers to competitors since the industry was deregulated there six months ago.

"We’re very concerned about what course residential competition will take," said Phillip G. Harmon, public policy analyst for consumer education in the Office of the People’s Council.

"Electricity costs have quadrupled in San Diego and in a few years when the rate caps go on down the road, that’s when all of a sudden deregulation will be on everybody’s radar screen and it won’t be pretty," he said. "Can you imagine if people’s costs go up 400 percent in the District of Columbia?"

The Office of the People’s Counsel, which represents D.C. consumers in utility cases, is planning a series of public meetings in each of the city’s eight wards to explain electric deregulation and answer residents’ questions. While the schedule has not been completed, the first meeting is planned for Jan. 17 at the Charles Sumner School and Museum downtown.

Harmon expressed some criticism of Pepco’s early efforts to educate consumers about "customer choice" coming to their 194,209 residential and 26,309 commercial customers in the District.

"What is being created is tremendous customer confusion," Harmon said. "What you have instead of customer education is marketing. It’s a sales pitch."

Copyright © 2001 The Common Denominator