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Ohio Cities and Towns Pass Emergency Resolutions for Local Rights, Against Bailout:
Follows Proposal to Bid Out Captive Customers in Blocks

Led by Ohio Citizen Action and the Earth Day Coalition, sixteen northern Ohio cities and towns, including Cleveland, have passed a common "emergency resolution" calling for protection of the rights of cities and towns, consumer empowerment, and environmental safeguards, while opposing a ratepayer bailout of utility monopolies in the state's electric deregulation debate.

"Restructuring must not go forward unless electric utility bills decrease for all Northeast Ohio customers, especially schools, local governments, and fixed and low income, residential and small business customers, share in the benefits of a restructured electric utility industry," the resolution reads, warning that deregulation threatens negative impacts for local communities. "Electric utility deregulation could lead to higher electric bills, pollution, and reduced, degraded or unreliable electric service from coal-fired and nuclear power plants...consumer and environmental protection must be the top priorities in any legislation."

The city of Cleveland leads the list of municipalities, which include Adams Township, Berne Township, Bloomsdale Village, Addison Township, Bratton Township, Dunkirk Village, Galena Village, Liberty Township, Milton Township, Salt Creek Township, Sharon Township, Shortcreek Township, Sherman Township, University Heights, and Vermilion.

The resolutions follow in the path of two state deregulation proposals introduced over the Summer whose focus on what to do with small consumers underscores the bankruptcy of "consumer choice" deregulation models for the vast majority of residents and businesses who remain Captive Consumers to "virtual monopolies" in deregulated markets such as California because they are too small to attract competitive suppliers.

Five of the state's largest electric utilities introduced a "consensus framework" proposal in late August which included a full ratepayer bailout of its uncompetitive assets and would define Captive Consumers as utility property which can be sold on the market to other power suppliers. Consumer advocates were shocked. "This plan will keep prices high, guarantee continued power shortages and create the only thing worse than Ohio's current regulated monopolies: deregulated monopolies," said John Mahaney, chairman of the Coalition for Choice in Electricity.

"The utilities are arguing that they own their customers, and should have the right to sell them," said Shari Weir of Ohio Citizen Action, which initially proposed the municipal resolutions. "Fortunately, most members in the legislature appear to think they are crazy."

The question remains, however, how small consumers are to be organized into marketable entities. More consumer- friendly legislation filed by by State Senator Bruce Johnson and Representative Pricsilla Mead last Summer would funnel Captive Consumers into "Regional Marketing Areas" (RMA's) and auction them off to bidding power companies.

David Rinebolt, a proponent of the RMA model, said the RMA "allows alternative providers to collect a large enough number of customers without incurring prohibitive marketing costs." 100,000 stranded consumers would be automatically grouped into each RMA and bid out to the lowest bidder. Proponents estimate the creation of 80 RMAs statewide.

Community Choice advocates say this falls short of a positive agenda for competitive electricity supply. "The Johnson-Mead bill's notion of aggregation is well-intentioned but misguided," said Citizen Action's Weir. "Recognizing that residents and most businesses are too small to attract competitive suppliers in other states that have deregulated, they proposed to create the RMAs as a solution."

"But RMA's are really a state minimum, or worst case scenario, not a positive model for competition," says Weir. Unlike Community Choice, which authorizes local governments to define community goals and control the competitive bidding process for its residents and businesses, the RMAs are not subject to community input or control over the bidding process. RMAs would be bid out under state regulators (PUCO) only as subunits of a utility's service territory" in two year contracts, totalling 80 statewide.

"Given PUCO's track record, no one in their right mind trusts its bureaucrats to regulated eighty contracts every two years in an intelligent manner," says Weir, who added that there is widespread concern that PUCO would ignore renewable energy, energy efficiency, low income and elderly protection, or other community goals. "Competitive bidding for RMA's would reduce state energy policy to the lowest common denominator: the dummest and the dirtiest. Local communities can look after our own interests better than that."

Political pressure to negotiate a deregulation law appears to be mounting in the state capitol. Ohio Senate President Richard H. Finan, a Cincinnati Republican, recently indicated he wants the legislature to take up deregulation of the state's electric industry as soon as they convene in January. Finan, who said the major issues are how to handle the RMAs, the ratepayer bailout of stranded costs, and how to protect local governments and school districts from lost revenues from utility property tax reductions, was unambiguous about what is driving driving deregulation in Ohio: "the pressure on this comes from the business community, pure and simple."

Environmental activists say special interests will try to force a bailout and may threaten the prospects for Community Choice in Ohio, which is a key state in the nation's electric industry deregulation debate. "The odds are very heavily stacked against us, as usual," says Harvey Wasserman, a senior advisor to Greenpeace and leading participant in Citizens Protecting Ohio (C-PRO), which recently helped defeat a planned radioactive waste dump in the state. "We have a very Republican legislature and governor, all prepared to do the bidding of the big users and utilities that bought their campaign air time. But we also have a very strong, savvy grassroots network in this state that understands the power of local organizing. If we can pull together enough counties and municipalities against this stranded cost rip-off and for Community Choice, we could make a serious fight of it."

Copyright (c) 1998 by the American Local Power Project.