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The Associated Press State & Local Wire The materials in the AP file were compiled by The Associated Press. These materials may not be republished without the express written consent of The Associated Press. June 22, 2002, Saturday, BC cycle SECTION:
Business News; State and Regional The numbers were seen as good news by proponents of the restructured market, which was designed to allow competitors to buy electricity from incumbent utilities - most of which have their own generating plants - and then deliver it to customers at a lower price. The market has suffered heavily over the past year or two since high wholesale electricity prices forced out some of the new competition, draining potential competitive savings out of the market. In the past year, alternative suppliers to the seven major incumbent utilities have increased the amount of electricity they deliver to customers, according to recent figures from the state consumer advocate's office. The alternative suppliers have also increased the number of business clients they serve, reversing a two-year drop, according to the figures. "It started to increase because some competitors who never left began to sign up other customers," said John Hanger, the executive director of the nonprofit Citizens for Pennsylvania's Future, and a former member of the state Public Utility Commission. Since October, the amount of electricity being supplied by those competitors has grown to 2,443.4 megawatts, an increase of 27 percent. The amount still pales in comparison to what it once was - 5370.4 megawatts in April 2001. In addition, business clients have stopped going back to utilities, and are signing up again with competitors. In April, 22,001 businesses were signed up with alternative suppliers, compared to 16,935 last July. The numbers are just a fraction of the nearly 80,000 businesses in April 2001, before high gas prices pinched competitors. Residential customers continue to go back to the utilities and the overall number of customers served by competitors continues to drop. In April, the number was 534,381, down nearly 10 percent from 591,596 last July. "I think there are a lot of barriers right now to serving residential customers," said Eric Matheson, a spokesman for the Arlington, Va.-based AES NewEnergy, Inc. Among the difficulties that competitors mentioned are the "stranded costs," or the portion of the bill that charges ratepayers so that the utilities can subsidize expensive power plants they committed to before the state's 1996 electricity deregulation law was signed. The costs were included as a compromise when the law was being drawn up to protect utilities from being sunk by the expense of building a new power plant. When those stranded costs disappear in the coming decade - schedules vary by utility - so will price caps, theoretically giving competitors more room to cut costs beneath the prices charged by the incumbents. Also, transaction costs are lower for commercial and industrial customers, which use more electricity. One Pennsylvania competitor, Sempra Energy Solutions of San Diego, looks for ways to reduce its clients' consumption while beating utility costs. "If you have a large customer at a single site, there are many ways they are consuming and many more levers to create value," said Aldyn Hoekstra, Sempra's vice president of strategy and development. At least until gas prices significantly improve and the power plants are paid for, the best chance for residents to get a better price is to join a cooperative, Hanger said. For instance, the nonprofit Energy Cooperative Association of Pennsylvania, based in Philadelphia, has about 6,500 largely residential accounts in a bulk-buying plan that beats the rates of the area utility, PECO Energy Co. Nadia Adawi, director of operations for the cooperative, said that the company is saving its residential customers about $25 a year. "It's modest," Adawi said, "but it's still $25 they're not paying to Peco." Marc Levy covers business for The Associated Press in Harrisburg.
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