The Wilmington, Delaware News Journal
By Steven Church and Patrick Jackson
Company Could Offer Services In Few Weeks
A Virginia-based electric provider intends to become the first company to compete with Delmarva Power for residential customers in Delaware by taking advantage of legislation expected to pass the General Assembly today. The president of Washington Gas Energy Services, Harry A. Warren, said Wednesday that if there are no major changes to electricity legislation moving through the state Legislature, the company could start marketing its services to consumers in "a couple of weeks." A second Virginia company, Pepco Energy Services, also has said it is interested in Delaware's residential customers, but is waiting to see how the legislation will affect power rates.
Warren has been talking to lawmakers about the current crop of legislation reacting to the 59- to 100-percent price increase set to hit Delmarva Power customers May 1. He said he would like to make sure that if lawmakers allow Delmarva to phase in those price hikes, that Washington also can phase in its own electric rates. Washington's rates would be higher than those currently in effect, but might be lower than the rates residents will pay starting May 1, Warren said. At the end of last year, Washington, a subsidiary of WGL Holdings Inc., which owns a large natural gas utility in Washington had 35,000 electricity customers in Maryland, Virginia and the District of Columbia, down from almost 42,000 in 2004, according to the company's annual financial report.
Competitive electric companies like Washington have failed to win large numbers of residential customers in the 20 states that have full or partial deregulation. Most competitive companies instead focus on larger commercial and industrial customers. Experts say it is difficult to make a profit in the residential market because the cost of signing up thousands of small customers is much higher than the cost of signing up a handful of big customers. Warren said Washington does not own any of its own electric plants, but relies on the wholesale power market, which in the mid-Atlantic region is run by PJM Interconnection. Prices on the PJM market have generally been rising in the last few years, but there are also times when they fall.
Warren said his company takes advantage of the dips in wholesale prices to buy its power, which should allow Washington to undercut prices Delmarva will impose on May 1. On that date, the average residential bill will climb by 59 percent, while industrial customers could see increases of 100 percent. Warren said that in Maryland, his company is offering to save customers of Baltimore Gas and Electric 10 percent on summer rates and 3 percent on winter rates. Elected officials, who have been criticized for removing price controls on electricity 1999, were quick to praise Washington. "I hope we get even more companies coming in," Gov. Ruth Ann Minner said. "The more we can bring in, the better for consumers." One of the main supporters of the 1999 deregulation law, Senate Majority Leader Harris B. McDowell III, D-Wilmington North, has argued that loosening regulations even further will spur competition and, ultimately, bring down prices. "I hope we're starting to see the light at the end of the tunnel," McDowell said.
Still connected to Delmarva Washington would sell its power over Delmarva's wires and customers would continue to get bills from Delmarva. Delmarva and Washington would then split the money; Washington would collect for the power consumed and Delmarva would collect for the use of its wires. Under deregulation Delmarva no longer generates power itself, but instead signs contracts with other electric producers and passes those costs on to customers.
Delmarva's sister company, however, Conectiv Energy, was one of the companies that won a contract to sell power through Delmarva, a fact that has angered many consumer advocates. Out of the 19 companies licensed to compete for power sales in Delaware, Washington is the only company to publicly announce its intention of selling to residents. Another sister company of Delmarva, Pepco Energy Services, sent a letter to the Public Service Commission last month saying that it was interested in selling to residents, but has been waiting until after May 1 to decide on whether to enter the market. Pepco specializes in selling "green energy," which means part, or all, of the power it sells is guaranteed to come from wind or another renewable source. The company has 7,500 electricity customers, mostly in Maryland, said Scott Brown, the company's marketing manager. Washington plans to sell both "green energy," which generally costs more, and regular power generated from coal, natural gas and nuclear energy.
Even if customers only sign up with Washington or another competitive company for a short period of time, they would still save some money, said Rep. Robert Valihura Jr., R-Laurel Ridge. Contact Steven Church at 324-2786 or schurch@delawareonline.com. FYI Washington Gas Energy Services takes advantage of the dips in wholesale prices to buy its power. That could allow it to undercut Delmarva's prices after May's increase.
