Deregulation Alarms

I’m preparing to keep a closer eye on a little legislative panel that’s meeting now and then at the state Capitol.

It’s the Joint Interim Committee on Insurance and Commerce, which is dealing with the monster issue known as electric deregulation. This is multibillion-dollar legislation that will be one of the key debates of the Arkansas General Assembly — unless, of course, it’s railroaded through the process like telecommunications deregulation was.

The committee recently heard testimony — some might say a scare session — on deregulation concerns from Matthew Brown, director of the National Conference of State Legislatures’ Energy Project.

Interestingly, Brown referred to a large loss of revenue to schools and local governments without providing details and lamented unpredictable revenue fluctuations. And, by golly, he says rates are so low in Arkansas that we shouldn’t expect much better from competition.

“Our tax system is built for a stable, regulated industry where there are not a lot of mergers, where the power company is in your state, where there’s not a lot of change,” he reportedly said.

So it sounds like he needs to be offering alternatives to the tax system, right? But instead of promoting deregulation efforts, he was encouraging legislators to focus on protecting the tax base.

Between the lines, this is a guy who is trying to provide ammunition for Entergy Corp.’s attempts to delay competitive forces as long as possible.

Even more disturbing were the legislators who sounded like they were buying into the concept of trying to forget full-scale deregulation.

State Rep. James Dietz, D-North Little Rock, a candidate for the Arkansas Senate and a buddy of Entergy superlobbyist Cecil Alexander, reportedly asked if there was a particular rush on moving into deregulation.

State Sen. Mike Beebe, D-Searcy told the Arkansas Democrat-Gazette, “Absent concern over large-scale industrial users and their growth and development, there’s not enough evidence that we need to move at all.”

Beebe might need to talk to his neighbors in Searcy. Residents of his hometown have been working with residents in Batesville for months to do something about their Entergy electric rates, which are much higher than those paid in cities like Conway and Jonesboro.

We need to move toward the reality that competition is coming in the electric industry. Proactive movement on deregulation legislation is preferred over stonewalling that is costing hundreds of other industries in Arkansas millions of dollars. Arkansas will lose competitive advantages in economic development if other states beat us to a deregulated environment.

Orderly Transition

I’m willing to accept

Entergy Arkansas’ insistence on orderly transition to competition, although I still think the original seven-year plan was ludicrous. But if the developments at the joint interim committee meeting were indeed the continuation of an orchestrated effort to help further delay or derail deregulation plans, then it’s time for Arkansas business leaders to stand up to the utility giant and make clear that the status quo is not an option for industries or consumers.

Lessons were learned from the telecommunications fight that ultimately never took place during the 1997 legislative session. Southwestern Bell Telephone Co., Alltel Corp. and other local telephone interests had their bill and votes lined up weeks before it began. I haven’t noticed any benefits from either the federal or state telecommunications legislation.

You can bet Entergy’s Alexander is laying his groundwork for the 1999 session, and his work escalates following this week’s election of dozens of legislators. And Entergy Corp. Vice Chairman Jerry Maulden, a longtime heavyweight in Arkansas business and legislative circles, has delayed retirement until after the session next year.

Like telecommunications, the electric industry is complex. But, unlike telecommunications, the electric issue puts residential and industrial interests at odds. The electric industry will capitalize on the polarization at every turn, and we can’t let legislators get too caught up in the demagoguery.