Utility executive wants competitive market

SOUTH PORTLAND — A Midwest utility executive declared Thursday that consumers will be the big winners from a shift to a deregulated electric industry based on free competition from all suppliers.

“The whole debate is about lower prices for consumers,” Richard Abdoo, chairman and chief executive officer of Wisconsin Energy Corp., told a regional conference. “It’s about giving consumers the power to vote with their dollars about where they will buy their energy.”

About 200 people attended the Consumers’ Energy Conference, which addressed a range of issues facing lawmakers as they move to reshape an industry structured for decades as state-regulated monopolies.

“The conference will raise more questions than it will answer, but they are the right questions,” Maine Public Advocate Stephen Ward said.

The Public Utilities Commission is scheduled to release within three weeks the draft of its recommendations to the Legislature regarding deregulation, Thomas Welch, commission chairman, told the conference.

While he would not divulge the contents of the draft, Welch reviewed the principles and issues underlying the commission’s work. Among them is the extent to which utilities are allowed to recover their past investments, known as “stranded costs.”

Those costs — estimated to total $2.5 billion in Maine — have shaped the deregulation debate, raising questions of whether the region’s high-cost utilities made bad business decisions or were victimized by bad government policy.

The conference, which drew participants from Maine and New Hampshire, was sponsored by organizations representing large industrial users of electricity, low-income consumers, independent power producers and environmental interests.

Abdoo, whose Milwaukee-based utility provides power at roughly half the prevailing rate in Maine, advocated a federally regulated transmission system that would give all suppliers access to all customers.

While Wisconsin Energy has prospered under the current system, Abdoo predicted that the company would flourish with competition.

“When the customer gets to be the judge and jury of our success, we think we’ll do very well,” he said.

Abdoo said high-cost utilities have benefited from an “out of whack” regulatory system in which those that charge the highest prices are rewarded with the highest returns on equity.

In advocating a swift restructuring of the industry, Abdoo didn’t rule out recovery of some of the utilities’ stranded costs. But he expressed skepticism about claims that companies were forced by government regulators to accept high-cost purchased power contracts from independent generators.

Those contracts, according to Central Maine Power Co., still account for 40 cents of every dollar paid by its customers and make up a significant share of the utility’s stranded costs. Other stranded costs include generating plants, poles and transmission lines.

One of the conference workshops focused on the post-deregulation role of independent producers whose electricity is generated from wood, biomass, hydro and other renewable resources.

Mark Isaacson, of Miller Hydro Group, promoted the marketing of such environmentally-friendly “green power” as a way for independent producers to carve out a niche in the emerging marketplace.

Acknowledging that plants based on renewable energy cannot match the rock-bottom prices now offered by those which burn low-cost coal or natural gas, Isaacson suggested that electricity branded as “green power” could win favor among some customers.