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DEREGULATION WILL BENEFIT BIG POWER USERS MOST, FORUM TOLD

If you run a big industrial or commercial company that uses lots of electricity, it's not unreasonable to expect about a 25 percent drop in rates as the state's power markets are deregulated.

If you're a small business or a commercial customer, the savings on your electric bills won't be nearly as great. And if you're a residential customer, the rates will go down even less.

That's the way the benefits of the ongoing push toward competitive markets probably will shake out in New York state, a group of industry executives said Wednesday during a forum on the deregulation of the state's electric industry.

"We really do believe that 25 percent is attainable" for the biggest industrial and commercial customers, said Assemblyman Paul Tonko, D-Amsterdam, chairman of the Assembly's energy committee.

Indeed, the agreement reached in July between New York State Electric & Gas Corp. and the state Public Service Commission staff on how to create competition in the utility's upstate markets calls for 5 percent annual price cuts during the next five years.

"They want one thing. They want lower prices," said Barbara Brenner, a lawyer representing a group of big industrial and commercial power users called the Multiple Interveners. "People want results right away."

But for customers who use less electricity, the savings will be considerably smaller. The NYSEG agreement calls for a rate freeze for residential and smaller commercial customers, with the possibility of lower rates coming from the savings that might be realized by renegotiating costly contracts with independent power producers.

Further savings also could come from reducing or eliminating the gross receipts tax that is collected through utility bills and also from lowering assessments on utility power plants, which typically are taxed at full value, while newer independent power projects receive tax breaks through industrial development agencies.

The tentative agreement between Niagara Mohawk Power Corp. and the PSC, which was announced last week without revealing any details, also includes substantial price cuts for the biggest customers and smaller reductions for residents, said Albert J. Budney, the utility's president and chief operating officer.

"There are price reductions for every customer class in our settlement," said Budney, who noted that the details of the Niagara Mohawk agreement should be released shortly. "There will be lots of competitive forces attacking our industry that will further drive costs down for all classes of customers."

Yet Niagara Falls Councilman Vince V. Anello wondered why the savings from competition and a restructured electric industry shouldn't be spread around more evenly. "I don't understand why the local residents can't be taken care of properly," he said.

Budney said the difference in the size of the rate cuts reflects the ability of the biggest power users to create jobs -- or move them to other areas with lower electric rates. In addition, he said, under the current regulated system, residential rates are being held down because the biggest power users have been paying more than their fair share, compared with the costs of providing the service.

"The business community, the large industrial customers, have been subsidizing the residential customers," Budney said.

Another reason why the biggest power users have been able to win the largest rate cuts is that they have been lobbying heavily for their interests through groups like the Multiple Intervenors, while smaller customers have lacked vigorous advocates. "You have to pay to play," Tonko said.

"Smaller commercial customers really need to band together and advocate, very loudly, what they need," Ms. Brenner said. "If you're not at the table, you're not going to achieve the best results."

The forum, which was held in Amherst, was sponsored by the Greater Buffalo Partnership and the Niagara Business Alliance.

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