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Brave New World
Businesses gear up for electricity deregulation; aggregation seen as key
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Business New Haven
10/18/1999
By: Michele Beck
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The world as we know it will change as of January 1," says Beryl Lyons, a spokesperson for the state's Department of Public Utility Control [DPUC].
And exactly what that world will bring has been the question ever since Gov. John G. Rowland signed into law in the spring of 1998 a measure that will change the way electricity is sold.
Bill 5005 will allow companies other than Connecticut Light & Power and United Illuminating to distribute electricity. The restructuring was spawned in hopes that customers would be able to save money on their electrical bills. Individual households and businesses will be able to shop around for the best bargain beginning in January.
Will things really be different?
Customers will still receive only one electricity bill, but the costs will each be broken down, or "unbundled." The wires and the distribution of electricity will still be owned by the local utility giants, but now other companies will be able to supply electricity using the existing wires.
"You'll still call your local utility company if there's an outage or a billing problem," Lyons explains. "It's just the generation portion of the bill that will change."
Lyons says that the changes in legislation will benefit consumers in several ways. People will be able to choose their electricity supplier, which will generate competition. The more competition in the market, usually, the lower the rates that consumers pay in the end.
Another facet of the plan is that customers will be able to switch suppliers during the year if they are unhappy with the service or billing. This feature, advocates hope, will insure improved service from suppliers.
If customers do not choose a supplier by the beginning of the new Millennium, they will be issued a "standard offer service" from their current utility supplier. This offer must be at least ten percent below base rates in effect on December 31, 1996.
On January 1, customers in "distressed" communities will be able to choose their electricity supplier. These include Ansonia, Bridgeport, Derby, East Hartford, East Haven, Griswold, Hartford, Killingly, Meriden, Middletown, New Britain, New Haven, New London, Plainfield, Putnam, Sprague, Stafford, Stratford, Thompson, Torrington, Waterbury, Winchester, Windham and Windsor Locks.
On July 1, 2000, all customers or Connecticut Light & Power [CL&P] and United Illuminating [UI] may choose an electricity supplier. As of January 1, all CL&P and UI customers will be on the standard offer service.
To date only one company has earned pending approval from the DPUC to sell electricity. Select Energy of Berlin will be able to begin servicing businesses and private residences as soon as the legislation takes affect after the first of the year. However, it is the only company that to date has reached this stage in the process of approval.
So far, there has also emerged only one entity approved to aggregate the supply of electricity in Connecticut and negotiate contract with electric companies. According to Lyons, there are seven or eight companies that have submitted applications.
The Manufacturing Alliance of Connecticut (MAC), a not-for-profit based in Waterbury, has been granted a license to aggregate the supply of electricity (see related story, page 6). Any company that supplies utilities must be licensed with the state.
MAC polled more than 7,000 members of the Connecticut manufacturing community to find out if they were interested in having MAC negotiate their contracts. So far there have been more than 300 responses, with more expected to come.
Attorney Jeff Gaudiosi, MAC's energy counsel, explains that once a customer signs a release form, he obtains the relevant electricity usage information from the utility company.
"We basically bring companies together to form a group," Gaudiosi says. "Then suppliers will bid for the best price. From there, the customer can either choose the company that provides the best price or go with another one."
According to Gaudiosi, price is not the only factor to consider when choosing a supplier.
"You have to take customer service and flexibility into consideration also," he explains.
MAC has been aggregating natural gas for more than four years. Since the change in legislation, Gaudiosi says he expects demand for assistance in buying electricity will take off after the dawn of the new year.
There is an extensive education campaign under way to help customers in Connecticut understand the restructuring legislation and what it will mean. Guest speakers have been sent by the DPUC to give presentations to business groups, heads of municipalities, chambers of commerce and spoken at trade shows, senior centers and business fairs.
Customers may access the DPUC Web site or log on to its new site designed especially for education about electricity restructuring. The web site is at www.dpuc-electric-choice.com, or businesses may call the DPUC's hotline at 888-922-3782. Guest speakers can be scheduled and questions can be answered by contacting the DPUC.
Lyons says her department is focusing on businesses, because they will have the opportunity to negotiate favorable rates from electricity suppliers. Apartment buildings and even communities will be able to aggregate as well in an effort to save more money.
But with intense competition to snag customers, will dinnertime be constantly interrupted by telemarketers?
Probably.
If customers are happy with their existing service and do not want the inconvenience of telemarketers' calls, the DPUC suggests consumers ask the telemarketer to take their names off the list. By law, they are not then allowed to call back.
Another alternative is to write to Direct Marketing Association, Telephone Preference Services, P.O. Box 9014, Farmingdale, NY 11735-9014.
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