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Its lonely on the open market

• Deregulation brings little change to the major electric utilities' customer rolls

Legislation designed to give large electricity customers more choices in selecting energy suppliers hasn't enticed many of them to the open market, despite a trade organization's eleventh-hour effort.

'It's not working,' says Mike Siebers, president and chief executive officer of Blue Heron Paper, one of Portland General Electric's largest customers. 'The market is not really developing, and the marketers are not coming to the table.'

Industrial customers say PGE has thrown too many obstacles in the path of businesses that are itching to break free of the utility. The Oregon Public Utility Commission needs to remove time constraints and other barriers, they say.

Siebers says the general state of the electric industry has also slowed activity. After the energy crisis of 2000-2001, when Enron Corp. and others allegedly manipulated the market, alternative energy sellers began dropping out because they were required to meet stricter credit requirements, he says.

PGE, on the other hand, says the Oregon Legislature's go-slow approach to deregulation has created a sluggish market.

'Restructuring is working for what Oregon collectively wants from it. It's a bit of a toe in the water that evolves slowly,' says Pamela Lesh, PGE's vice president of regulatory and federal affairs. 'This is a political choice. That's where Oregon is. It's not fair to blame it on us and PacifiCorp.'

Not a high price to pay

The law was designed to allow customers to sign up with alternative energy companies while ensuring that remaining utility customers would not have to pay a penalty.

Whether the pioneering law or utilities' obstacles are to blame, it's clear that Oregon's restructuring options haven't been a huge draw for larger customers.

Last month, one unnamed PGE customer chose to leave for an alternative supplier. (Alternative suppliers include Boise-based Idacorp and Strategic Energy.) And 170 of the 264 PGE customers that now purchase market-based rates from the company decided to simply forgo the alternatives and return to PGE's more traditional 'cost-of-service' rates for 2003.

Melinda Davison, attorney for Industrial Customers of Northwest Utilities, says flaws in the rules to implement Oregon's restructuring law have stunted activity.

In both the five-year 'jump-start' plan and the one-year option for choosing alternative suppliers, PGE gave customers one week to decide, Davison says.

The goal of the five-year plan Ñ under which customers could leave the utility for five years and pay fixed transition charges Ñ was to give customers more certainty about long-term transition costs.

Transition costs reimburse the utility Ñ and remaining customers Ñ for departing customers' share of a utility's capital and contract costs.

A quick decision?

Alan Meyer, the Western region energy manager for Weyerhaeuser Co. says the five-year plan 'was definitely something we considered. We were involved in the process of trying to make this a real opportunity with PGE. The problem was, the way things unfolded, there wasn't enough time or data to make a decision.'

Customers also complained about the way PGE offered various one-year pricing options.

On Nov. 15, PGE unveiled its new rates for 2003 Ñ 15 percent to 18 percent lower than steep 2002 rates. The company told large customers they must decide by that Monday, Nov. 18, whether they wanted to choose PGE's new low traditional rates, an alternative supplier, or market-based rates through PGE.

Even with the decrease for large customers, PGE's industrial rates are the highest in the Northwest, Davison says.

PGE spokesman Scott Simms says the decision time frame wasn't as tight as it may have appeared. Customers who choose PGE's market-based rates may decide any time during the year to 'jump' to an alternative supplier, he says.

PGE also may offer the five-year option again in the middle of the year.