Power Deregulation Poses Challenges For Nw Almost Inevitably, Electricity Rates Will Go Up, Official Says

Deregulation poses unique challenges for a region that enjoys the lowest electricity rates in the country, U.S. Rep. Rick White, R-Seattle, told a gathering of Northwest energy leaders Wednesday.

In other regions, he said, everyone down to welfare officials wants to open up energy markets so businesses and residents alike can cut utility bills that are as much as four times higher than those in the Northwest.

Their representatives are supporting efforts in Congress to give consumers that ability, he said.

White said the Northwest must figure out how its unusual mix of public and private resources, based on inexpensive hydropower, can be preserved.

“How can we get ahead of the game?” asked White, who sits on the House subcommittee that will make some of the first important decisions on federal deregulation bills.

The 1st Congressional District Republican, an early target of ads sponsored by labor and other groups fighting deregulation, was leading a summit in Seattle addressed by many officials trying to respond to demands for change in the utility industry.

Compared with telephone deregulation, White said, “this is an issue that may affect people a little more viscerally.” Almost inevitably, said Gary Zarker, superintendent of Seattle City Light, rates will go up. Installing the hardware and software that will enable utilities to match buyers and sellers of power will be costly, he said.

Savings from energy purchases may not offset those costs, he said. Margaret Pageler, who chairs the Seattle City Council committee that oversees Zarker’s municipal utility, said constituents are angry about the impending changes.

“Why should they go through that hassle?” she said.

But other speakers said preserving the status quo stifles innovations that could enhance the delivery of energy services. “Electricity fuels the U.S. economy,” said Maura O’Neill, and deregulation will launch dramatic technological changes just as it did in telecommunications.

O’Neill is president of Connext Inc., a Bellevue, Wash., company that offers specialized energy services. She and Ralph Cavanagh of the Natural Resources Defense Council noted the gulf in research and development spending between regulated and deregulated industries.

Deregulated companies are punished by analysts if they don’t spend 10 percent of revenues on research, she said. But utilities, said Cavanagh, commit less than one-quarter of 1 percent. “That’s a statement of the quagmire we’ve got to get out of,” he said. “We’re stuck.”

If the Northwest cannot break away from the industry as it exists, Cavanagh added, there is a risk the region’s edge in energy costs will be lost. U.S. Rep. Norm Dicks, D-Bremerton, said deregulation of other industries helped restore world economic leadership to the United States.

The region should not fight utility deregulation, he said, but should assure that whatever federal bill is adopted preserves the special characteristics of the Northwest system, including the Bonneville Power Administration.

Weyerhaeuser Co. President Jack Creighton said energy costs for company plants in places such as Alabama and Wisconsin have slipped below those available from some Northwest utilities.

The status quo, he said, also fostered bad decision-making that leads to disasters such as the Washington Public Power Supply System nuclear plants.

Creighton said Weyerhaeuser wants a solution for the region that does not favor industry alone but everyone equally.

, DataTimes