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Power Play

A small band of consumer advocates wants to save the public from a deregulation juggernaut.

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But, Ellis says, they'll be surprised in 2007, when we're "dropped down into limbo." The caps that now keep the electricity rates at 1993 levels will come off, the government will relinquish control of electricity sales, and a competitive market will arise in which customers determine prices by shopping around.

That's how it's supposed to work, anyway. The problem is, few policymakers and even fewer citizens really comprehend the complex mechanics of supply and distribution.

As legislators and lobbyists continue to wrangle about the mechanics of how deregulation will proceed in Virginia, there seems to be little doubt that it will proceed. But some say that Virginia, by embracing deregulation when other states have backed off, is plunging toward disaster: Rates double or triple the current figures in a chaotic, unreliable marketplace.

So who's advocating consumer interests in this process?

There's Ellis, who was general counsel for 25 years for the Richmond, Fredericksburg & Potomac Railroad. There's Irene Leech, president of the Virginia Citizens Consumer Council. And … well, that's pretty much it.

About 50 people typically attend each meeting of the state's electricity-deregulation task force. Nearly all, Ellis suspects, are lawyers paid to represent power companies and large corporations.

"We've had lots of meetings — and I've been it, for the public," says Ellis, 80, who devotes much of his spare time to pro-bono civic work. He often speaks at committee hearings, but acknowledges that one man's words amount to little. "I got a chance to flail my arms around and made some noise," he says. He was "invited not to attend" one recent meeting, and at another, he says, he was told he would not be permitted to speak.

He's been studying and questioning deregulation for two years now. And even so, he admits, "I don't spend the amount of time on it I would if I was being paid that $200 an hour."

Leech is a professor of consumer affairs at Virginia Tech who drives to Richmond twice a week to attend legislative hearings and committee meetings on electric restructuring. She feels that her presence, along with Ellis', helps ensure that the impact of deregulation on consumers is not forgotten in the discussion of its mechanics.

They're concerned, Ellis explains, because "the big push is to give benefits to the vested interests, as I call it. They all stand to profit from deregulation, in one way or another." It is quite obvious, he says, that power companies support deregulation so they can sell electricity to other states — especially in the North, where rates are higher — leaving residential customers in Virginia to fend for themselves. For instance, New York rates are now about twice as high as Virginia's, so it would be profitable for Dominion to sell its power there.

Virginia is the only state in the South (which enjoys lower rates overall than the rest of the country) currently proceeding with deregulation. "People keep saying there are problems in Virginia," Leech says. "The problems aren't in Virginia. The problems are nationwide. This isn't working anywhere."

Deregulation expert Mark Cooper conducted a study for the Consumer Federation of America called "All Pain, No Gain," that examined the results of restructuring in other states. He observed significant cost increases from market manipulation, aggressive electricity trading, and extra charges to consumers at times when electricity is scarce.

The SCC, the state agency in charge of arranging the transition from a regulated market to one that's market-driven, also said in its latest report (Dec. 30) that it was concerned. If the state takes the next step in deregulation — turning over transmission to a regional transmission entity, which is controlled by the federal government — then increased rates and interruptions in electric service could result, the SCC says. It asked the state to take two steps back in the process to save Virginia's autonomy over its electricity.

Yet "our policy makers have ignored what the SCC recommended," Leech says. She believes that's because legislators don't entirely understand deregulation, and although they know problems lie ahead, they aren't sure what to do. "The transition task force has pretty much taken care of things and said, 'Trust us, you don't have to spend the time learning this.'"

And the task force leaders "are so tightly tied to making sure that we have competition, from my perspective, at all costs," she says. "I say we have competition if competition gives us as good or better of an item than we've had — but I'm not for competition no matter what."

Can deregulation be stopped? "Honestly, it's not politically possible right now," Leech says. "So what we are actually working toward is the [Delegate Harry J.] Parrish bill, which would hopefully give us a one-year delay." (The bill passed the House Feb. 4 and goes before the Senate this week.)

Meanwhile, Ellis and Leech say they need more voices. They urge consumers to start paying attention and immediately call their legislators to say they're concerned.

"I've done all I can," Ellis says. "I've used up my entrée. … The big boys, as I call them, are running the show."

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