Unbundled: electric deregulation may provide benefits to Alaskan consumers but is it practical? And is it likely?

• Author: Ess, Charlie

Like most other states, Alaska has begun testing the waters of deregulating its electric utility industry. Deregulation means many things to many people, and because of its complexity, the process could have serious consequences to some of the nation's biggest businesses, as well as residential consumers who depend upon an uninterrupted flow of electricity to their homes.

The recent surge in interest has been fueled, in part, by the Department of Energy's findings last year that electric utility companies competing in a free-market structure would reduce residential rates by 15 percent. That translates to at least $232 in annual savings for a family of four, and would reduce the amount of hydrocarbon pollution by upwards of 25 million metric tons by 2010.

The DOE's analysis also found that commercial and industrial users would see respective reductions of five and 13 percent.

At the behest of the Clinton Administration, the DOE headed up a bill for the restructuring of electric utilities last year that died in Congress - as did all bills relating to electricity. Since then, the DOE and the administration have gone back to the drawing board and redrafted a similar version, "but with some new elements which I can't disclose," says Tom Welch, the DOE's media contact.

Power of Choice

What has gotten everybody talking at the local level is whether state regulatory authorities should allow their electric utilities to "unbundle" various components that have been consolidated for years. The way it stands in Alaska now, you pay the bill for generation, transmission and distribution all in one lump.

Deregulation would allow you to choose among either competing generators of power or independent marketing entities, which would contract to purchase large blocks of kilowatt hours from generational facilities then sell them to you - at hopefully reduced rates.

The question of whether a choice in electrical providers will bring more harm than good has garnered enough concern. Since last year, it has been in the hands of Alaska's Legislature to decide how to proceed as the present system undergoes transformation, which at some point appears inevitable.

To that end, the Joint Committee on Electric Utility Restructuring was formed under a House resolution and will report to the Alaska Legislature before the end of this session. But according to Eric Yould, executive director of the Alaska Rural Electric Cooperative Association (an organization comprised of 24 electric utility companies) it is unlikely that any legislative action affecting the present electric utility structure will happen during this session.

Alaska's Not Alone

Deregulation, in terms of electrical power, has been getting a lot of play across the United States in recent years as other...