End of a monopoly? New technology and public pressure are forcing changes in the electric utility business.

• Author: Sikkema, Eric

Electric power -- who generates and delivers it to customers, and how much it costs-has been held under tight state and federal regulatory control since the 1920s. Now, new technologies and low prices for natural gas are forcing utilities to be more competitive, and public demand for lower rates is pressuring state and federal governments to consider deregulating the industry.

In the process, state legislators are being buffeted by demands from consumers, utilities, businesses, labor, environmentalists and advocates for the poor and elderly -- all groups that play a role in restructuring the electric utility industry.

"I continually hear from individuals, small businesses and manufacturers who are finding it harder and harder to cope with rising electricity costs," explains New York Assemblyman Paul Tonko, chair of the Assembly Committee on Energy. "These customers need help, and they need it now. We must look at the opportunities that competition and restructuring provide for lowering rates."

Senator Michael Sanchez, chairman of a joint legislative committee that is examining industry changes in New Mexico, notes that it will be "crucial to balance the multiple interests involved if a state hopes to resolve all the issues in restructuring the electric industry."

"It is my sincere hope that when the change occurs that it will mean lower rates for all and not just an elite few," he said.

Those favoring competition and deregulation point out the large disparities in electricity rates: In California, the average rate is twice that of Washington; New Hampshire's is 30 percent more than New York's. Rate differences can even be found within a state. Although the cost of serving industrial customers is lower than homeowners, in a number of states the difference can be as much as 40 percent.

"Monopoly utilities have enjoyed a "free lunch' for too long," argues Senator Mark Montigny, a leading advocate of deregulation in Massachusetts. "They have the benefit of government protection, which results in inefficient regulation and high profits. Businesses and cost-conscious consumers are the losers. Competition and deregulation must prevail in order for rates to come down substantially."

On the other side of the debate are utilities, environmentalists and consumers advocates. Utilities unable to compete by lowering costs will be forced to face the consequences -- bankruptcy or buyout by another utility. Additional utility concerns focus on the recovery...