Changes in utility industry on horizon

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Deregulation restructuring the utility industry is a nationwide issue. To date, 24 states have either passed restructuring laws or implemented them, said Ken McClure, chair of City Utilities' restructuring and competition task force. He said he sees a change ahead for Missourians, but not before a consensus is reached in Jefferson City. |ret||ret||tab|

"There's an awful lot of people that have got an interest is this," he said. "In terms of dollars nationally, it's $210 billion." This dwarfs anything we've seen in telecommunications, airlines, railroads or trucking, he added. |ret||ret||tab|

McClure said the term deregulation is a misnomer. "We're not deregulating the industry; we're restructuring it." He added that regulation occurs no matters what utility provides the power. |ret||ret||tab|

"Generation would become competitive" or deregulated, among various power suppliers, he said, but "transmission and distribution would remain regulated monopolies, as they are now." CU would still be responsible for transmitting and distributing power to customers. "You'll get your bill from CU."|ret||ret||tab|

If when utility deregulation occurs in Missouri, customers will have a choice of who their electricity provider will be. |ret||ret||tab|

Those most likely to benefit from deregulation, if benefit means paying less, would be large industrial users that account for most of the load of each system, McClure said.|ret||ret||tab|

"We're convinced the price will drop," said Robert Johnson, an independent attorney who represents large energy users such as Barnes Jewish and Unity hospitals in St. Louis. Purchasing power on a competitive basis is more economical, he added. |ret||ret||tab|

He also pointed to the innovations coming out of the telecommunications industry as an example of what one might expect from utility deregulation. "We believe there will be more ancillary services available to the ultimate customer: better metering, different billing services," Johnson added. |ret||ret||tab|

In a regulated scenario, utility providers can still get their costs back if "they made a bad judgment call," Johnson said. "There's no incentive for them to reduce their costs. The incentives are for them to increase their costs under our present regulatory scheme," he added.|ret||ret||tab|

Kathryn Hundman, spokesperson for the statewide coalition, Missourians for Energy Choice, agreed. Citing a study by Brubaker & Associates in St. Louis, Hundman said Missouri residents and businesses could save nearly $400 million annually if electricity was available at market rates. Savings to businesses would account for more than two-thirds of that $400 million.|ret||ret||tab|

Utility deregulation might better fit coastal states where power costs are higher and not be as beneficial to already economical states such as Missouri, said Mark Viguet, manager of marketing and communications for City Utilities. According to Viguet, Missouri utility rates compare favorably with other Midwestern states and local power costs are lower yet. |ret||ret||tab|

Among the three classes of utility users in Missouri residential, commercial, and industrial, CU-generated power is either the lowest cost or near the lowest in cost for all three groups, he added. |ret||ret||tab|

Missouri is powered by three types of utility providers, according to McClure: investor-owned (five), rural electric cooperatives or REAs (40), and municipal systems (88). |ret||ret||tab|

Investor-owned utilities are regulated by the Missouri Public Service Commission and serve large metropolitan areas, such as St. Louis and Kansas City. REAs serve smaller, rural areas around the state and are directed by elected boards. Municipally owned systems, of which CU is the largest in the state, are locally owned by customers and regulated by boards.|ret||ret||tab|

However the utility deregulation issue plays out, CU anticipates change. "We feel very well positioned on a number of fronts to compete," Viguet said. "We are preparing today for customer choice, whether it's two, three or five years out," he added. |ret||ret||tab|

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