Most people like to make choices in the marketplace. We choose our long-distance carrier and heating-oil company and tell friends when we have found a bargain. But when it comes to electricity, there is little choice for most of us even though Maine law adopted “competition” for electricity in 1997.

Here’s the situation. Large industrial and commercial users now have choices for electricity in the marketplace. They can shop around from one electricity producer to another and get lower prices. It’s a good deal for them, but ordinary households and small businesses have little choice, except for higher-priced “green” power. More than 99 percent of us get our electricity from Central Maine Power, Bangor Hydro-Electric or Maine Public Service.

So how does the price of electricity get set for the ordinary consumer?

Under Maine law when there is no competition, the Public Utilities Commission steps in. It sets up a process of competitive bidding with electricity producers and comes up with what is known as the “Standard Offer Service (SOS).” Our local electric company then passes that price along to us, the consumer. The current electrical rates are due to expire in March 2005.

As new negotiations begin, the electrical producing industry is changing. Under the provisions of Maine’s 1997 electric restructuring law, CMP, Bangor Hydro and Maine Public Service Co. sold their generation plants and assets to the highest bidder. They no longer produce electricity, but they still are responsible for a reliable distribution system. Since then, these same companies have been bought by out-of-state or out-of-country larger holding companies.

What does this mean to us consumers?

As the PUC negotiates new rates for our electricity, they must be prepared to deal with real risks. For example, the practice of securing a SOS for all of our electricity in one negotiating cycle could expose consumers to inflated prices and set us up for another cycle of volatile price changes in the future. Electricity costs have been spiking up and down and without adequate federal oversight, this is likely to continue. Some experts suggest that the volatile electrical market is subject to manipulation as occurred in California and the Enron scandal. This should not be repeated in Maine.

So what can the PUC do to protect consumers who have no choice in the marketplace?

AARP believes that the PUC should create a plan to assure long-term price stability for residential customers and not rely on short-term contracts that are likely to reflect volatile market conditions. The PUC plan procurement strategy should reflect the following principles for ensuring a long-term supply of stable, affordable, reliable and environmentally sustainable energy service:

. Diversify electrical resources and ensure a more balanced purchase from different providers over time. This will help to reduce the danger of short-term price swings, both up and down.

. Strengthen the existing low-income utility assistance programs including weatherizing older homes. This will ensure that the neediest are not left out in the cold.

. Consider the acquisition of energy efficiency and more efficient use of electricity as a resource demand- reduction service along with traditional generation, as part of the SOS, because these approaches are likely to compare favorably with “smokestack” generation in the long run.

Although ordinary consumers cannot yet choose from an assortment of electricity producers, we still expect government to work on our behalf. It is essential that the PUC implement a program ensuring that consumers will have affordable and reliable electric service now and into the future.

Jud Dolphin is the state director for AARP Maine.