POWER PLAYS

Nine states have passed laws on restructuring electric utilities, designed to deregulate the electric industry and let customers pick their own power company.

The move toward electric utility deregulation started in 1992, when the Energy Policy Act forced utilities to transmit other power providers' electricity on their lines, for a fee.

"Illinois recently passed a bill, Kansas is close to having a bill, and Missouri is looking into restructuring proposals," said Susan Gallagher, spokeswoman for Union Electric, headquartered in St. Louis.

While the Congress is considering several proposals and weighing possible legislation to remove most of the federal regulatory control of electric utilities, officials in all 50 states are investigating establishing competitive markets for electricity.

It's happening everywhere -- on the East Coast, the West Coast and in between -- said Mike Cleary, another UE spokesman from St. Louis.

Missouri joined the restructuring fray during the spring of 1996, said Gallagher. That's when the Missouri Public Service Commission made a competitive energy pilot as one condition for its approval of Union Electric's merger with an Illinois-based utility, CIPSCO Inc.

Since then, Union Electric and the Central Illinois Public Service Co. of Springfield, Ill., have received approval from the Missouri PSC and the Illinois Commerce Commission to merge. The companies are waiting on word from several federal agencies, including the Federal Energy Regulatory Commission, Securities and Exchange Commission and Nuclear Regulatory Commission.

CIPS provides electric power to 317,000 Illinois customers; UE provides electrical power to 1 million Missouri customers and 64,000 Illinois customers.

There are two committees studying how best to deregulate the retail electric industry in Missouri:

-- A PSC task force with 38 members that includes utility representatives, consumers and legislators, headed by the commission's general counsel, Dan K. Joyce, as moderator.

-- A legislative committee appointed headed by Rep. Carol Jean Mays of Kansas City and Sen. Wayne Good of Normandy.

The commission has instructed the task force to present its report in February.

The state legislative committee of seven representatives and seven senators will report its findings and recommendations prior to the start of the legislative session in January.

The Retail Electric Competition Task Force, as it is known, is charged with looking into retail wheeling of electricity and related issues and recommend how Missouri should implement retail electric competition if legislation is enacted to authorize competition.

The Task Force, in this capacity, said Joyce, is responsible for scheduling and conducting meetings and overseeing the progress of the Task Force's working groups. PSC commissioners serve the Task Force in an ex officio capacity.

The PSC Task Force, is divided into four working groups: market structure, marketing power issues, electric reliability and investments in the utility industry.

Joyce said it would probably be next spring before "we started seeing some reports," and even longer before proposals emerge.

The UE-CIPS merger would help both utilities prepare for competition in a deregulated market, said Cleary. It will help reduce costs by pooling resources, by joint purchasing. "That can help us keep our rates down."

Cleary said UE has prepared for deregulation since the late 1980s.

The company favors deregulation, but open competition in the retail power market could have a downside, Cleary said.

Power brokers could offer low-cost electricity to large industries. That could force local utility companies to raise rates to their other customers to cover the cost of losing a big power user, Cleary said.

One could see that there could be winners and losers around the country, he said.

UE, said Gallagher, favors a carefully considered transition into competition and a "Pool" system to give UE and other Missouri utilities the responsibility for forecasting electricity needs and aggregating the electrical load for customers within their service areas.

If competition comes to Missouri, hundreds of providers -- local and non-local utilities, power markets and others, will vie for the business of customers once served by traditional utilities that generated and delivered all utilities.

The addition of dozens of new participants could cause some serious reliability problems.

In its simplest terms, reliability boils down to the dynamic and integrated nature of the system delivering power. Failure of a supplier to live up to obligations to provide electricity could seriously affect customers.

Today, U.S. electric utilities are linked within one of three interconnected transmission grids. This allows utilities to draw on a larger pool of generation in an emergency.

Maintaining a constant frequency, current and close control of voltage -- a phenomenon akin to pressure -- are critical to the system's stability, because power providers cannot control paths power will take through transmission lines and interconnections.

The current system is working. Today, virtually every American has access to electricity and electricity rates in the United States are the lowest in the world.