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What is Restructuring?

Restructuring is a term used to describe the process of changing how you currently receive electricity at your home or business. It is also called re-regulation, de-regulation, retail access or competitive choice. Whatever it is called, it will forever change the way you purchase electricity. Restructuring would allow choice to be introduced to some or all of your purchase decisions regarding electricity, but at what cost?

Isn't Choice Good?

Yes. Choice is a basic premise of the American way of life. We have demonstrated as a society, however, that some choices must be made in such a way that the most Americans benefit. The choice regarding how we receive electric service is a serious matter. Change in current regulation is not likely to benefit everyone. We must be sure that changes in how electric service is provided do not hurt those who can least afford to be hurt. In providing choice for some, we should not limit or diminish the choice for others.

Will It Cost Less?

Mississippians already enjoy low cost electricity. Electric rates for all customers in Mississippi are 12% below the national average. Electric rates for residential customers are 16% below the national average. Some states (California and New York for example) have electric rates that are much higher than the national average. The promises of dramatic decreases in price in an already low cost state seem unrealistic. Restructuring the electric utility industry may actually increase the price of electricity for low cost states like Mississippi.

Can't We Restructure Electric Companies Just Like We Did The Phone Companies?

There are certainly mixed feelings about the success of restructuring the telephone industry. However, electricity is different for two very simples reasons. Electricity's physical characteristics make it much more difficult to harness and deliver. Electricity is also considered necessary for life in today's work. When telephone lines get overloaded, you hear a busy signal. When electric lines fail, the world as we know it stops. We must be extremely cautious in applying the experiences of other industries to the electricity industry.

Who Will Benefit From A Change In Electricity Regulation?

It is not certain anyone will really benefit. Large industrial users already receive low cost electricity because of the large amounts of electricity they consume. However, they support restructuring in hopes their costs will decrease even more. While these large customers already receive the lowest cost, they want lower prices yet. Residential and small commercial customers are likely to pay more, making large industrial users the only ones likely to benefit.

Will Restructuring Decrease Regulation?

Not likely. A decrease in regulation will not occur, but there will be a shift in who benefits from regulation. Under current proposals, only the generation function of electric companies would be open for choice. You would continue to receive local service from a current supplier, but the energy (generation) component could be purchased from a choice of supplier. It would be similar to your telephone bill arrangement where you pay for local service and then pay separately for long distance, call waiting, etc. Like your telephone bill, it will be complex and more costly for most customers. The complexity and the potential number of participants will require more regulation based on what has happened in other industries.

What Do Customers Say?

In a recent survey conducted by Luntz Research Companies, Mississippians stated clearly that they want to move cautiously. When considering that restructuring might lead to greater complexity, 84% say Mississippi should move "cautiously or not at all." The survey also concluded that Mississippians are currently satisfied with their electric supplier, 89% giving them high marks.

Should Mississippi Follow States Like California?

Mississippi has done a good job with electric utility regulation. Our customer price and customer satisfaction ratings prove this. California and other high priced states are moving forward on this issue in an attempt to become competitive in a national economy. With electric rates nearly twice what Mississippi customers pay, it could be argued that they should consider options. The Mississippi Public Service Commission's utility regulation has serviced the State well. Performance based rate plans and other innovations of the Commission have kept costs to Mississippi customers below the national average and have ensured quality service for Mississippians.

ELECTRIC POWER ASSOCIATIONS OF MISSISSIPPI
For more information e-mail Ron Stewart or
contact him at 1-601-605-8600.