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Florida slow to plug into the power deregulation idea
© St. Petersburg Times, published October 1, 2000 Forget about deregulating Florida's entrenched electric power monopolies. Here's a quick fix to finding cheaper electricity in the Tampa Bay area. A long, long extension cord. Step 1: Snake the cord from any home in the bay area up the coastline to Apalachicola or so. That's where Florida Power Corp.'s service territory ends and Gulf Power Corp.'s Panhandle territory begins. Step 2: Find an outlet and plug it in. Step 3: Voila! Enjoy an immediate 26 percent drop in electric rates. For the $90 or so Florida Power blithely charges for 1,000 kilowatt hours of electricity, Gulf Power charges less than $66. I don't know about you, but given my power bills, that cord could save me close to $340 a year. Tampa Electric customers could benefit almost as much. For them, Gulf Power's rates are 22 percent lower. I know. Extension cords are impractical. Tampa Bay's utilities might pout over the loss of customers. And laws do not allow Floridians to choose where they get their power. If you live in Florida Power's territory, you are stuck paying the highest residential rates of any major utility in the state. Deregulation might change that. But don't hold your breath. Thanks to this summer's magnificent bungling of the country's big deregulation test in California, it will be a long time before Florida grants its residents a choice of power providers. San Diego Gas and Electric Co. customers were the first in the nation to pay market-based rates for power. Competition was supposed to reduce electricity prices. Instead, California residents freaked when their already high electric rates more than doubled. Last year's residential rates of $110 for 1,000 kilowatt hours jumped to $256 or more during the heat of this summer. High demand for power. Low supply of electricity. The combo killed much of the momentum for deregulation. If only Californians had a long extension cord. They could string it cross country to reach Tampa Bay's "bargain" price for power. Cheap is relative. Now many other states committed to deregulation -- mostly states whose electric rates are significantly higher than those in Florida -- are recoiling at the possibility that the promise of lower-priced power may backfire. Aggravating this year's deregulation woes are rising energy costs. The prices of oil and natural gas, key fuels burned by utilities to generate electricity, are up a lot and expected to stay high. That run-up in energy prices further undermined consumer expectations that a free market for electricity would lower electric rates. All of a sudden, Florida's reluctance to touch deregulation looks almost prescient. At the least, the deregulation mess gives the industry more ammo to preserve the status quo. "The experience in California has pushed deregulation off several more years," Bill Cavanaugh, chief executive of Carolina Power & Light, said during a recent visit to Florida. In CP&L's home state of North Carolina, any delay of deregulation gives CP&L more time to prepare and possibly survive the pressures of increased electric competition. CP&L will complete its purchase of Florida Progress and subsidiary Florida Power in November, making it one of the largest power companies in the Southeast. (For the record, Carolina Power & Light charges its residential customers in North Carolina $8.12 less for 1,000 kilowatt hours than its subsidiary Florida Power will charge Floridians.) Truth is, power deregulation has gotten a bum rap. The California disaster was nurtured by screw-ups over many years. The capacity of California's utilities to generate electricity had fallen way behind demand. The San Diego test occurred during unusually hot weather in the West. When demand for power increased, extra electricity normally imported from neighboring states was unavailable. The result? The price of what little untapped electric power remained was driven sky-high in a bidding war. Could the same crisis happen when, or if, Florida deregulates? Florida has a plan: Let other states make the early mistakes. "Nothing is really broken here," says John Ramil, president of TECO Energy, the parent of Tampa Electric. "I think the Florida approach is, "Let's not be on the front end.' California is learning a lot. And thank goodness we did not have to be first," he said. Florida utilities already compete when selling power on the wholesale market or pitching energy-related services to businesses. But on the residential side, Floridians have no choice in power providers. The electric monopoly is all the more obvious today when so many other residential services -- telephone, cellular phone, Internet access, even cable/satellite TV -- are engaged in cutthroat competition. To stir Florida's electric pot, new power players are trying to enter the state, build so-called merchant plants and start competing in the wholesale electricity market. The arrival of companies such as Duke Energy and Calpine Corp., with their combined-cycle, natural gas-fired power plants, has been resisted by Florida's major utilities and stonewalled in the state courts. That brings us to Florida's sole step toward deregulation: a commission. Oh boy. Here's what we know so far: Florida's Energy 2020 Study Commission was appointed by Gov. Jeb Bush to look at the state's electric industry and future energy needs. The 17-member group first met last month. It hopes to make recommendations about needed changes in Florida's wholesale power market before the Legislature meets next spring rather than waiting until its December 2001 deadline. Florida is expected to need 8,000 to 10,000 megawatts of new generation over the next decade to meet its rapidly growing electric demand. After years of inaction, utilities such as Florida Power and Tampa Electric are moving quickly to build new generating plants to meet the power shortfall. Their spurt of activity also aims to thwart Duke Energy and others from convincing the state it needs their extra megawatts. All I know is: Had California's deregulation effort shown that lower residential power prices were possible, this Florida commission would pursue a far more aggressive agenda. Don't expect much change anytime soon. Anybody got a long extension cord? -- Robert Trigaux can be reached at (727) 893-8405 or trigaux@sptimes.com Where to plug in my extension cord?In Florida, prices range widely for residential electricity. Here's what it will cost on average to power a modest home for one month (1,000 kilowatt hours). Florida Power -$89.71 Tampa Electric -$84.45 Florida Power & Light -$80.55 Gulf Power -$65.88 Source: Companies. Assumes requested price increases take effect.
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