THE SALINA JOURNAL OP-ED SATURDAY, MAY 10, 1997 B3 T POINT OF VIEW Open electric competition: Too good to be true? Kansans could wind up with the short end of the !retail wheeling' stick A lthough not. everyone would immediately recognize the Latin phrase "caveat emptor." virtually everyone would agree with its translation: "Let the buyer beware." That A same common-sense attitude can also be found in iuimy other familial- phrases, including, "You get what you pay for," and "If it sounds too good to be true, it probably is." "Retail wheeling" is another term that many people would find difficult to define. There is disagreement even within our industry, but most understand the term to mean ian open system of compe- *» Ji|ion among electric utilities that would allow retail customers to buy electricity from a distant company, which would then deliver that electricity over the local company's lines. Unbridled retail wheeling would end the current system in which regulated electric utilities are required to provide reliable service in certified territories at prices controlled by state and federal agencies. Proponents claim that retail wheeling KENT STEWARD [or the Salinn Journal will result in lower prices for everyone without any reductions in electric reliability or service. We at Sunflower Electric Power Corporation, a non-profit, member-owned wholesale power supply utility that serves 34 western Kansas counties, suggest that when you hear the words "retail wheeling," you should think "caveat emptor." Translation: Don't believe every promise you hear. Retail wheeling promises lower prices, but open competition does not guarantee lower prices. Open competition guarantees market prices. Consider what open competition did last winter to the prices of natural gas and propane. And try to decipher your deregulated telephone bill. Under open competition, electric pricing schemes will be difficult to comprehend and your rates will skyrocket in the summer and other periods of peak demand. Despite high prices in some areas, average prices for Kansas are approximately 13 percent below the national average. If open competition equalizes electric prices across the nation, the average price in Kansas may actually rise. Only time will tell what the open market price for electricity might be, but one thing can be predicted with confidence. Most of the benefits will go to the big guys. Large corporations, the strongest proponents of retail wheeling, will use their enormous buying power to skim off surplus power at rock-bottom prices, "By 1935, 90 percent of the farms of America were still waiting for electricity. The far-profit electric companies would not serve us." leaving much higher prices for homeowners and small businesses. Reliability can be expected to suffer with retail wheeling. Under the existing system, utilities treat electricity less as a commodity and more as a basic necessity of life. They are required to provide service to everyone within their certified territories. Local crews quickly mobilize to restore power after violent Kansas storms. The utilities invest heavily in maintenance programs and are directly responsible to their customers and the Kansas Corporation Commission. These standard operating procedures will change radically under retail wheeling. For-profit utilities will pursue only the best customers, leaving remote or otherwise undesirable customers to some sort of make-shift, second-class regulated service. Utilities will merge into larger companies with centralized services far removed from many of their customers. Repairs will happen much more slowly, and outages can be expected more often as the demand for profits leads to downsizing of crews and reductions in maintenance programs. You may pay less, but you'll get what you pay for. In the attempt to offer lower prices as they compete for business, the new "lean and mean" utility companies will cost out every aspect of their service. The result will be a revolutionary change in lifestyle for most Americans. Customers will have to pay a premium price for electricity during periods of peak demand to exchange for lower prices during non-peak periods. If you want to come home from work on a 100-degree August afternoon lower the thermostat to 72 degrees, turn on the TV, put dinner in the oven, and throw a load of clothes into the washing machine, you can expect to pay dearly for the privilege. Kansas electric utilities now pay $200 million annually in local and state taxes. If the price of electricity drops, huge shortfalls in tax revenues will result. Some might suggest imposing higher tax rates on the devalued electric industry to keep tax revenues at the same level, but Kansas already taxes its electric utilities at a rate second only to New Jersey. Under open competition, that competitive disadvantage would turn over the Kansas markets to out-of-state electric utilities. In short order, Kansans would be sending their electric payments to another state and depending on those out-of-state utili- ties for reliability and service. That may happen anyway if Kansas electric utilities are not somehow compensated for investments they were required to make as regulated utilities but would be unable to recoup under open competition. Those of us in rural America learned a hard lesson a long time ago. Thomas Edison invented the electric light in 1879, and within a few short years most of urban America was electrified. By 1935 — a full half-century later — 90 percent of the farms of America were still waiting for electricity. The for-profit electric companies would not serve us. They said there just wasn't enough money in it for them. So, we banded together into rural electric cooperatives and served ourselves. Now some of those same companies want retail wheeling so that they can come into our territories, use our poles and lines, and take away our large industrial customers. Apparently, retail wheeling is a bad idea whose time has come. Even though we cannot stop the momentum of retail wheeling, we at Sunflower intend to fight against its most damaging impacts. If you agree that the promise of lower prices with no reductions in reliability or service seems too good to be true, make your concerns known to your representatives and senators. • Kent Steward is manager of corporate communications for the Sunflower Electric Power Corporation, Hays. TO RESPOND TO ADS, CALL: 1-9OO-737-116O $2.19/miriute, you must be at least 18 years of age. CONNECTIC? 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