New Hampshire Residents Enjoy a First: Choosing Their Electricity Suppliers

Ever since New Hampshire moved to deregulate its electric industry last month, utility companies based as far away as California and Illinois have used gimmicks to woo residents Clayton and Mary Caddy to switch their service.

Green Mountain Energy Partners, for example, tried to entice the couple to sign on with their service by giving them a blue spruce tree. The couple took the tree but said, "no thanks" to Green Mountain Energy. Meanwhile, their current provider, Public Service Company of New Hampshire (PSNH), is trying to keep the Caddys as customers by offering them $25 in electricity coupons.

The Caddys are just one of 17,000 households and small businesses in the Green Mountain State participating in of one of America's most innovative experiments in opening the electric-power market to competition. Rather than pay sky-high bills to debt-ridden PSNH, residents can now choose from 30 different companies across the country.

While other states, including Michigan, Illinois, and California, are moving modestly toward deregulation, New Hampshire's program is pioneering because it includes residential as well as business consumers.

Driven by electric bills that are the highest in the country - as much as 61 percent above the national average - New Hampshire is the first state to attempt this degree of deregulation. The result is a legal and logistical power struggle that utilities, economists, and lawyers are monitoring closely.

"All the big boys are watching," says George McCluskey, head of restructuring at the state's Public Utilities Commission. "Nobody is going to make money on New Hampshire, but they all want to see how it's done." If successful, the program may be expanded to reach all New Hampshire residents in 1998.

Is cost the only issue?

Under the two-year trial program, the Caddys and others are free to pick any qualified company. Most power peddlers are pushing an earth-friendly message, but that makes no difference to the Caddys. "We want the lowest price, basically," says Mrs. Caddy. They figure their bills will drop from $80 a month to $60. They worry about one thing: Their home is located in a wooded rural area, where weather-related power outages occur regularly.

"Is PSNH still gong to come fix our lines if we're using a different company?" she asks. "It could very well turn out like the telephone company, where they won't come."

Competitors and government officials say there will be no service problems.They cite a glut of cheap power that no one expected 10 years ago and plenty of new sources for creating power, from solid waste to wind. For now, the competitors will use PSNH's existing lines. Customers will pay a $20 surcharge, after which power is still cheaper for most than under the old system.

"It's just like running a giant extension cord into New Hampshire," says James Rodier, whose Freedom Energy Corp. successfully challenged PSNH's monopoly in the state Supreme Court.

Not easy for former monopoly

But while the trial program is going smoothly, McCluskey says the chances of a trouble-free conversion for the whole state are "zero." The biggest problem, he says, is PSNH and its parent company, Northeast Utilities. The utility was saved from bankruptcy in 1989 by an agreement with the state that guaranteed rate increases, but the firm remains saddled with $3 billion in debt from its troubled Seabrook nuclear power plant.

Mr. Caddy is aware of the utility's problem. He was at Seabrook as an iron worker, and is more sympathetic than many ratepayers, who say the utility has only itself to blame.

"I think protesters played a huge role" in the costly delay of the plant's opening, Mrs. Caddy says. But she says her husband saw construction-cost overruns and waste first-hand, which caused much of the debt. The utility, like others that lost big on nuclear conversion, says it has an enforceable contract.

Many are betting the power struggle will go all the way to the US Supreme Court, although negotiations come first.

"We want to collaborate; we don't want to litigate," says PSNH spokesman Martin Murray. "But everyone thinks you can just flip a switch and drop rates. That's not true.... We have a contract with the state."