Friday, March 26, 1999
Electric deregulation explored
Ohio begins hearings on proposal
The Associated Press
COLUMBUS — After years of false starts and months of industry negotiations with the legislature, lawmakers got a look Thursday at a bill that backers hope will bring competition to the sale of electric power.
Rep. Priscilla Mead and Sen. Bruce Johnson, both Columbus-area Republicans, outlined the plan at a joint hearing of the House Public Utilities Committee and the Senate Ways and Means Committee, which will hold separate hearings later on the bill.
Two attempts to pass some sort of deregulation have failed over the last three years, so lawmakers met over seven months with the utility companies and their customers.
“There have been hundreds if not thousands of hours put into this bill,” Mr. Johnson said.
Mr. Johnson said the bill represents a fair compromise that allows competition to begin while reimbursing utilities for investments whose costs they currently pass on to consumers. They would have to absorb those costs in a truly competitive market.
The plan allows the state's eight investor-owned utilities, which now operate as regulated monopolies, to recover a portion of those costs over a transition period that would begin Jan. 1, 2001, and last three to five years. Customers would pay each company a user fee during the period.
Each company has its own transition period, with the longest lasting for the companies operated by FirstEnergy and Monongahela Power, which have large investments in nu clear power plants. .
Those “stranded costs” have been pegged at between $5 billion and $11 billion.
“The basic approach contemplated in this bill is a good deal instead of no deal at all,” Mr. Johnson said at the hearing, held in the 100-plus-seat Senate Finance Hearing Room to accommodate the dozens of lobbyists representing various interests in the $11 billion-a-year industry.
The other major hurdles were how residential customers will realize lower prices and how to restructure the way utilities pay taxes without shortchanging schools and local governments.
The utilities, whose transmission and distribution systems will remain regulated, will see their property assessment rate drop from 100 percent to 25 percent — the same as other businesses.
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