In April 16, 1998 Gov. Jim Gilmore (R) signed
House Bill 1172 to deregulate Virginiafs electric utility industry. The
law calls for competition to begin in January 2002 and for full competition
by January 2004. It also requires that an independent system operator (ISO)
and a regional power exchange (RPX) be established by January 1, 2001 to
manage operation of the competitive wholesale market. The General Assembly
will meet in the 1999 Session to develop further details.
SCC Ensures Smooth Transition
In an effort to ensure a smooth transition
to a competitive electricity environment, the State Corporation Commission
(SCC) is requiring Virginiafs electric utilities to implement programs
- Educate consumers;
- Ensure that each distributor provides access to its retail distribution
system to each customer in its service territory;
- Promote electric energy efficiency and conservation, protection of
the environment, and research and development;
- Provide minimum standards of training for employees who operate and
maintain the ISO or RPX; and
- Educate, retrain, or provide outplacement services for employees of
electric utilities whose employment will be directly affected by the implementation
Required Pilot Programs
The SCC ordered the statefs IOUs, Virginia
Power and American Electric Power, to begin working on the implementation
of at least one retail wheeling pilot program in their service territories.
The SCC directed the two IOUs to conduct workshops to solicit input from
customers and environmental groups regarding the proper structure and characteristics
of such pilots. Other electric companies and electric cooperatives are
encouraged to do the same. Detailed plans are to be filed with the commission
by Aug. 1, 1998.
Natural Gas Choice
The SCC is considering a request by Washington
Gas to begin a two-year pilot "customer choice" program. If approved,
the program would allow up
to 20 percent of Washington Gas customers in Northern Virginia the opportunity
to choose their natural gas provider.
Under the proposed pilot program, customers who participate would purchase
their gas supply from other energy suppliers while obtaining delivery of
the gas through the local system of pipes owned by Washington Gas. The
company predicts approximately 29,000 residential customers and 2,000 commercial
customers will be participating during the first year. Customers could
enroll at any time and would be accepted on a first-come, first-served
Dealing with Stranded Costs
Details on the handling of stranded costs
will be developed during the 1999 legislative session. Utilities just and
reasonable stranded costs will be recoverable. The General Assembly and
the SCC will determine and implement appropriate consumer safeguards related
to stranded costs.
Because Virginiafs restructuring law called for an accelerated transition
period, the recovery of utilities stranded costs may cause rates to be
higher than would otherwise be the case.
Virginia Power, which serves nearly 2 million customers, says it has invested
approximately $3 billion in power plants and energy contracts that would
be unprofitable in a competitive marketplace.
|Average Price of Electricity:
|6.11¢ per kWh
|6.12¢ per kWh
|Average Price - Residential
|7.67¢ per kWh
|7.72¢ per kWh
|Average Price - Commercial
|5.90¢ per kWh
|6.68¢ per kWh
|Average Price - Industrial
|4.00¢ per kWh
|4.00¢ per kWh
|All prices are
per kilowatt-hour (kWh).
Cost per kWh is based on total electric utility industry.
Source: EEI's Data for the Statistical Yearbook of the the Electric Utility
Industry - 1996
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