Last January when Rhode Island’s electric market was officially opened
to competition it wasn’t exactly a monumental moment. If it weren’t for
a change in billing format many people probably wouldn’t have noticed.
That’s because only the largest electricity consumers are able to
realize savings on their bills even now, one year into a restructured
market. But there is good news in the year ahead, according to state
Public Utilities Commission Chairman James Malachowski, who said, “we’re
finally turning the corner.”
In 1999, Malachowski said he anticipates the electricity market will
become more competitive, allowing even some medium-size businesses to
save money. Although, he added, “I think it will still be awhile for
residential customers.”
Competition appears to be opening up more quickly in Narragansett
Electric Co.’s territory, because of the recently completed sale of its
parent company’s power plants to U.S. Generating Co. for $1.6 billion.
“The situation in (Blackstone Valley Electric Co.), Newport (Electric
Corp.) is different,” Malachowski said. Eastern Utilities Associates,
which owns both companies, has a smaller lineup of power generation
assets, comprised mostly of partial ownership of some plants.
“The generation assets they’re selling don’t have the same magnitude,
and therefore won’t have the same impact on their financials,” he said.
NEES also struck a deal on Dec. 14 to merge with National Grid Group,
which owns a high-voltage transmission network in England and Wales. It
is the world’s largest privately owned transmission company.
Energy industry members indicate that consumers should expect more deals
like this, since companies that retain control of the wire, or
transmission systems will become more profitable through growth and
consolidation.
Newport Electric customers will actually pay rates slightly “higher than
when the (restructuring) bill passed” and B.V.E. customer bills will
only be about 2 percent lower than when the bill passed, according to
Malachowski.
Although things are expected to get more competitive, Malachowski said
he is still advising consumers to have “patience.”
“There’s clearly a transitional period, unfortunately our transition
period has taken two-and-a-half, three years,” he said.
There are some positive signs, however, that the market is opening up.
In December, The Energy Council of R.I., which represents about 90 of
the state’s largest energy users, reached an agreement with Select
Energy of Connecticut that could save 25 of its members about 3 percent
on their energy bills each month.
It’s something that TEC-RI’s Executive Director Roger Buck didn’t expect
yet.
But bids on the group’s aggregation pool were lower than expected, Buck
said. But “because of the amazingly low price of oil” Select Energy,
which is a subsidiary of Northeast Utilities, could commit to a lower
energy price for the 12- to 18-month contract, Buck said.
“I thought that I would probably reject all bids,” he added. “I don’t
see any real competition until the standard offer price goes to 3.8
cents in 2000.”
John Athas, managing director of Select Energy, said the company
exceeded its sales expectations in both Rhode Island and Massachusetts
“by a significant margin” this year. “We anticipated it was going to be
a very rough start to the marketplace, it’s turned out to be a lot
different. It’s a lot slower market, but a lot of our competitors left.”
Other big news from the year: discovering the cost of bringing
competition to the electric industry. The numbers were filed with state
energy regulators late this fall.
In exchange for giving up power plants and basically surrendering their
best revenue stream – supplying electricity – NEES and EUA will get back
more than $100 billion combined, Malachowski said. That money, he
explained, comes from selling off power plants and a fee tacked onto
consumers’ bills allowing the companies to recover “stranded costs” in
states where restructuring is underway.
“At this point I think you can question whether legitimately the deal
that was given the utilities was too rich,” he said.
And efforts to bring competition to the natural gas industry have “been much quieter,” Malachowski said.
About 1,500 of Providence Gas Co.’s business customers, which account for about 22 percent of the company’s output, have selected a new service that allows them to buy gas from alternate sources, he said.
“They are getting real savings, as high as 20 percent it’s a really
successful program.”
Valley Gas Co. customers are also being offered a similar service, but it appears to be developing at a slower pace, he added.
