North Carolina Residents Debate Deregulation of Electricity 
Paul B. Johnson 

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09/05/2000 
KRTBN Knight-Ridder Tribune Business News: High Point Enterprise - North 
Carolina 



Copyright (C) 2000 KRTBN Knight Ridder Tribune Business News; Source: World 
Reporter (TM) 
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Donald Ratliffe doesn't know the intimate details over the complex debate 
over whether to deregulate the sale of electricity to millions of customers 
in North Carolina. 
But the 57-year-old mechanic from Kernersville said he does know enough to 
boil the issue down to a proverbial phrase if it ain't broke, don't fix it. 
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"Anytime they've seemed to deregulate something, it becomes a big mess," 
Ratliffe said, referring to the deregulation of fields such as the airline 
and telephone industries. Change can be good, but it's not always good." 
Answering questions recently as part of an informal survey of men and women 
in the Triad, Ratliffe said the current monopoly system for electric service 
suits him. 
"When you think about what you get for your money, it's still a great buy," 
he said. 
Ratliffe was one of the people interviewed recently by the High Point 
Enterprise on their thoughts about whether the state should reform the 
$8-billion-a-year electric industry. Members of the Study Commission on the 
Future of Electric Service in N.C. have spent the past three years dealing 
with analysts, lobbyists and industry representatives on how to approach the 
intricate issue. In April, the 29-member commission approved recommendations 
that include deregulating the sale of electricity starting in 2005, with full 
implementation in 2006. The commission will resume its meetings in Raleigh 
Sept. 14, with the goal of coming up with legislation that could be proposed 
for the 2001 General Assembly session. 
State legislators will have the final say on whether to deregulate an 
industry that has functioned under a monopoly system for virtually a century. 
The response of people answering questions posed by the Enterprise was 
similar to the opinions expressed two years ago when eight public hearings 
were held across the state on electric deregulation. Approximately 1,850 
people attended the meetings, according to a report prepared for the 
commission. 
"Many people expressed serious concerns about restructuring, without 
expressing a definite opinion either `for' or `against' it," reported the 
consultant that prepared the commission's report on the information gathered 
at the hearings. 
The debate over deregulation carries special significance for High Point 
because of the monumental level of municipal power debts. 
The study commission hasn't come up with a specific plan to address the $5.5 
billion debt. The city of High Point has municipal power debts of 
approximately $430 million, the fourth-highest amount among the 51 towns and 
cities in the state that run their own electric distribution systems. 
Several proposals considered by the commission would compel the 51 cities and 
towns to sell their power distribution systems, with the revenue going toward 
debt relief. 
For Avis Murphy of High Point, the topic of deregulation prompts her to 
envision potential benefits and pitfalls. 
The 25-year-old retail manager said having more options to pick her family's 
power provider should lead to better service and prices because of 
competition. 
But she can also see people being taken advantage of if the government 
doesn't have some oversight to prevent price gouging. Murphy suggested having 
what would amount to a social safety net if deregulation takes place, such as 
putting a cap on how much rates can go up during a certain period of time 
among companies providing service. 
Many men and women interviewed by the Enterprise said they didn't want a 
deregulated electric industry to become a day-to-day telemarketing and sales 
pitch drudgery. 
Lou Damron of High Point and her friend enjoying lunch rolled their eyes when 
asked if they would mind getting telemarketing calls from power companies as 
they do now from telecommunication companies. 
"Whenever they do something like this, it always gets more complicated," said 
59-year-old retiree. "I like the way it is now I don't have to worry about 
it." 
Retiree Johnnie Alexander of High Point said that she wouldn't want 
deregulation to interfere with her ability to have an equalized payment plan, 
which allows her to keep her payments the same through the year. 
"I like the way it is now," the 67year-old woman said. 
Some people expressed an interest in deregulation if it would lead to better 
prices. 
Competition could be an improvement because companies would offer lower rates 
to lure customers, said 69-year-old retiree John Cochran of High Point. Also, 
a competitive market may compel more companies to build new power plants to 
meet the demand of a growing base of customers, Cochran said. 
"It always a better when there's an open marketplace," said 26-yearold 
financial specialist Phillip Carter of Advance, who works in High Point. "I'm 
a firm believer in capitalism and the free market." 
One challenge that officials face in reforming the electric industry is the 
wide disparity in the customer base and amount of electricity used per 
customer in North Carolina. 
Of the approximately 4 million electric customers in the state, 87 percent 
are residential customers. About 12 percent are commercial customers, meaning 
owners of shopping centers and office buildings, with about 1 percent 
industrial customers, such as manufacturers. 
However, the vast majority of electricity is used by the least number of 
customers. 
For example, for Carolina Power & Light Co., less than 1 percent of its 
customers use 25 percent of the power that the utility generates. Put another 
way, of CP&L's 1.2 million customers, the top 50 virtually all industries use 
25 percent of the utility's energy, CP&L reports. 
The disparity in the scope of customers and in how much electricity various 
types of customers use make it challenging to come up with a competitive rate 
structure where all types of customers benefit, said Charles Harman, a Duke 
University mechanical engineering professor. 
"What's going to happen with deregulation is that people with market clout 
are going to be able to negotiate better deals than people without market 
clout," said Harman, who has an expertise in electric industry issues. 
That means ordinary people may find that deregulation won't have any 
noticeable effect on what they pay each month to a utility, Harman said.