The words "electricity deregulation" had an idealistic capitalist ring to them a few months ago.
And then came California.
Last April, a 29-member study commission on the Future of the Electric Utility Industry recommended that the North Carolina General Assembly deregulate the industry by Jan. 1, 2005.
But that was before California and other states including New York, New Jersey and Rhode Island received international scrutiny for the fallout of their deregulation efforts.
Many California residents have faced blackouts and high electricity costs, utility companies say, because a 1996 law forced them to sell their power generation plants and then purchase the power that they distribute to consumers.
North Carolina state Sen. David Hoyle (D-Gaston), co-chair of the deregulation commission, said the experience has persuaded the committee not to pursue legislation this year.
"California absolutely is 99 percent of the problem. But there's been no good news out there, even in the Northeast," he said.
Dennis Nightingale, a director with the North Carolina Utilities Commission, said that the state is learning from other states' woes. "[The study commission] is taking more of a wait-and-see approach," he said.
"You have some states out there that have initiated the process and some have not worked so well-namely California. Then you have some states that are doing quite well, such as Pennsylvania. It's best to find out what other states are learning," he added.
One of California's mistakes, which Pennsylvania avoided, was forcing all the utilities to spin off their power generation facilities at the same time.
In addition, California-unlike Pennsylvania-did not add new power plants before deregulating, Nightingale said. He noted that North Carolina has added gas fire combustion facilities that provide a large energy supply.
However, some say that even in Pennsylvania there have been significant disruptions because of deregulation.
"Some of the suppliers that wanted to go in have not been able to go in-they have not found it profitable," said Bryan Moore, a spokesperson for Electricities, the organization that represents the North Carolina municipal power plants that would be privatized under deregulation. "Pennsylvania is the model, but clearly it's not going as well as people hoped," he said.
Although the deregulation commission has not officially pushed back the date for opening up the markets, Hoyle and others recognize there is much to be done before the state is ready.
"It may be 10 years. I don't know how long we'll be in this process," Hoyle said.
In order for deregulation to not drive up prices, Moore said the state must ensure that there is a credible wholesale electricity market.
"It's called market power-currently [Carolina Power and Light Company] and Duke Power dominate the market," he said. "We need to look at whether a company from New York who wants to come down can really compete."
Moore added that it is not yet clear whether all areas of North Carolina would even have a single electricity provider if the markets were opened.
Other states that intended to deregulate electricity markets-including Nevada, Arkansas and Alabama-have also backed off. In Nevada, Gov. Kenny Guinn has delayed deregulation twice since it was scheduled to go into effect Jan. 1, 2000. Nevada Public Utilities Commission spokesperson Cynthia Messina noted that the issue was currently being debated in the state legislature.
The Associated Press contributed to this story.
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