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Electrifying lower prices
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June 26, 1998: 3:17 p.m. ET
Proposal would force electric companies to compete for customers
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NEW YORK (CNNfn) - President Clinton's proposal to break open the $220 billion electric utility market to competition should result in lower prices for consumers, analysts said Friday.
The Clinton administration on Friday planned to send a legislative package to Congress that would allow electric companies to compete for customers by Jan. 1, 2003.
"Over the long term, a competitive market is going to result in lower prices," said Doug Fischer, senior electric utility analyst at A.G. Edwards in New York. "My guess is it will mean lower prices for everybody."
Consumer advocates have pushed for changes in the industry, which is dominated by monopolies.
"It's a $200-plus billion industry with hundreds of billions of dollars in assets at stake," said David Nemtzow, president of the Alliance to Save Energy. "This is a big debate."
The movement for the changes began in the states, where some electric costs are high, Fischer said.
Some states in the Northeast pay as much as 15 cents a kilowatt hour, while states like Idaho pay as little as 3.5 cents a kilowatt hour, said Christopher Budzynski, an analyst at Legg Mason Wood Walker Inc. in Baltimore, Md.
"High-cost states have been ahead of the movement," Budzynski said. "Restructuring is fragmented state to state. That's why there's movement for federal action."
The leaders include California and Pennsylvania, while other states in the southeast, where electricity is cheap, haven't done as much, Budzynski said.
Fischer said because of that fragmentation, it would be difficult to put a dollar figure on the savings customers will see,.
The White House released the plan in March. Energy Secretary Federico Pena was widely expected to send the bill to Congress Friday as one of his last official acts before leaving public office.
House Commerce Committee Chairman Thomas Bliley, R-Va., said the White House bill could push Congress into taking action this year.
But most industry and environmental lobbyists said they didn't foresee any action for at least a year, perhaps two years.
Budzynski also has his doubts about action right away. But the Jan. 1, 2003 deadline is realistic if the topic becomes an election-year issue, he said.
"It's not on the front burner," Budzynski said. "It doesn't seem likely that something is going to pass this year."
Meanwhile, Republicans in the House Commerce Committee are circulating an alternative plan to open up competition by an earlier date -- Jan. 1, 2001. Bliley, who is leading that effort, said the White House bill would help bring momentum to the issue.
The White House plan gives states the option to stick with the status quo. It also has stronger measures to stem power plant pollution, programs for energy conservation, and aid for low-income customers.
-- from staff and wire reports
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