STATE TAKES THE SLOW ROUTE TO DEREGULATION

State Sen. Wayne Goode isn't ready to rush into deregulating the electric utility industry in Missouri.

Goode, a St. Louis area Democrat, co-chairs a joint House and Senate legislative committee studying the complex deregulation issue.

"Most consumer groups are very cautious about this," he said.

Labor unions oppose deregulation for fear that retail electric competition would lead to fewer union jobs, Goode said.

The committee has yet to take any action.

Goode said the committee may make some recommendations this fall, beginning with whether the current system of power-company monopolies should be changed.

If the committee supports some type of deregulation, legislation could be drafted for consideration by state lawmakers in the 1999 legislative session, Goode said.

Goode said he hasn't seen any great demand by the public for deregulation.

"There is not a big push for this," he said.

If the power market is opened up, the residential customer needs to be protected, Goode said.

Any new system needs to be set up so that residential customers won't see higher rates, he said.

Critics of deregulation argue that with open competition, utility companies would grab up the most profitable customers -- industrial and commercial users -- first.

Residential customers could be left with less economical service. Some utility companies might steer clear of residential customers entirely, critics warn.

A statewide task force recently released a lengthy report on the whole deregulation issue. The report followed 10 months of study by some 60 people.

The task force included representatives of the electric industry, consumer groups and others.

The report is expected to serve as a starting point for Goode's committee.

Goode said the task force report outlines the issues and options that would be involved in any restructuring of the electric industry.

The task force recommended that retail competition only be introduced if it can be shown that it will benefit all power customers.

The task force also said:

* Small users of electric service must be protected and assured they will receive affordable service.

* Consumer-protection measures should be put in place to deal with everything from fraud to the privacy of customer billing and payment records.

* Efforts need to be made to educate consumers regarding the issue of retail electric competition.

For some in state government, talk of utility deregulation is misleading.

"It won't be deregulation," said Dan Joyce, general counsel for the Missouri Public Service Commission. The commission regulates the utility industry in the state.

The commission created the task force that studied the utility restructuring issue.

Joyce said the focus isn't on deregulating every aspect of the utility industry. The focus is on opening up competition in the area of power generation.

"We are not talking about people competing to run wires down streets and under the ground," he said.

A key issue in any talk of restructuring electric service is how much control would be given to the consumer.

One option is to set up a regional power pool. Utility companies would purchase their power through the pool and then pass the savings on to consumers in the form of lower-cost electricity.

Many of the utility companies in Missouri support the power pool concept as "a hedging mechanism" against full-scale retail competition, Joyce said.

The other option is direct access. It would allow consumers and consumer groups to buy power from any producer. The electricity would be delivered to the customer through the utility lines of the local power company.

The task force didn't make any recommendation as to which option is best.

Task force members also didn't reach agreement on how best to handle stranded costs.

Those costs are the difference between a utility's worth in the current, regulated market and its value in a competitive market.

Rates charged customers today are regulated by the state. If power generation were subject to open competition, prices likely would be lower, the task force said.

As a result, utilities could see reduced revenues, at least for the short term.

Utility companies want any deregulation to include some system that would allow them to recover stranded costs.

Thirteen other states including Illinois have approved deregulation plans to implement retail competition over the next three years.

But Joyce said high-priced power fueled deregulation efforts in other states.