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Pennsylvania thrives while California struggles Filed: 02/05/2001


The Associated Press

HARRISBURG, Pa. Four years after California and Pennsylvania passed laws restructuring their electric industries, Pennsylvanians have all the power they need at competitive rates while Californians face daily threats of blackouts and pleas to conserve.

Regulators say that's because the two states took different tacks.

"The Pennsylvania and California approaches to competition are as different as apples and oranges," said John Hanger, a former member of the state Public Utility Commission, now with an organization that lobbies on consumer and environmental causes.

Unlike California, Pennsylvania did not push utilities to sell power generating plants. And utilities can enter into long-term contracts to buy power from suppliers at a fixed rate, unlike in California, where private utilities buy power on the open market, paying an amount that fluctuates based on demand.

Pennsylvania has the added advantage of producing more power than it consumes. California must import electricity from other states.

The result is that Pennsylvania customers are paying the same rate or less for power than they did in 1997. The PUC estimates that consumers have saved $2.8 billion since 1996 through across-the-board rate cuts and by shopping for electricity.

At the same time, greener sources of power, like a new windmill farm on the site of a former coal mine, have added to the state's generation capacity. And utilities have quadrupled the financial support they offer low-income customers.

But some consumer advocates are wary about Pennsylvania's success. They say Pennsylvania and other states in the process of deregulating could face problems similar to California's once rate caps are removed. Pennsylvania's rates remain capped for at least the next five years.

"Pennsylvania, which has been touted as a deregulation success, does not really have a deregulated market," says consumer group Public Citizen. "We will see many states follow in California's footsteps if deregulation is not canceled."

The economics behind Pennsylvania's deregulated electricity market mystify university professor Patrick Loll, but he is satisfied with the results. Since deregulation began, he has switched suppliers twice: first from Philadelphia's PECO Energy to a company that specializes in power from environmentally friendly sources like the wind and sun, then to a nonprofit cooperative that offered him a better price on the same renewable energy.

"Frankly, I was worried that some of the same sort of slamming that took place with telephone service might occur, but that hasn't come about," said Loll, an assistant professor of pharmacology at the University of Pennsylvania School of Medicine.

Experts also say the eastern two-thirds of the state has benefited from a distribution system shared with New Jersey, Maryland, Delaware, Washington, D.C., and part of Virginia.

That link, operated by Norristown-based PJM Interconnection, was founded by utilities in 1927 to keep electricity flowing smoothly by continually matching demand for power with supply. Any of about 200 market members can bid on energy futures, make contracts over the Internet with providers, buy electricity on the spot or a day ahead, or settle up for energy already consumed.

The Federal Energy Regulatory Commission has strongly encouraged states to place facilities under the control of regional organizations, which also exist in New England and on a statewide basis in California and New York. Two others are under development in the Midwest, said Barbara Connors, a commission spokeswoman.

But California could find it hard to link its Independent System Operator with utilities in neighboring states, some of which are reconsidering whether to restructure at all.

PJM's regional approach gives utilities in the mid-Atlantic states more flexibility, said Phillip Harris, the company's chief executive officer. That's important when dealing with a product that must be on hand at every moment, he said.

"It's like flying an airplane that can't ever land. The electrical grid can't ever be shut down," he said.

-- Martin Thompson (, February 05, 2001


Wasn't Pennsylvania one of the states that "lost" population during the latest census. Could there be a correlation here that the press is not covering?

-- . (, February 05, 2001.

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