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Deregulating Electricity

October 26, 1995

Re "Complex Power Issue Needs More Exposure," editorial, Oct. 15: My concern with the deregulation of the electric industry lies with small business. Contrary to your assertion, the compromise provides for small business and residential customers to access low-cost power through the creation of an energy pool. The pool will dispense the lowest-ost power first, allowing all customers to share in the benefits of competition.

For those small businesses that desire to choose their own provider, the compromise specifically provides for direct access simultaneously with the large customers. Moreover, the agreement creates more opportunity for small business to aggregate to meet their electricity needs. The compromise establishes a marketplace for electricity, so that all customers can access the current price of electricity.

One disturbing proposal that is currently being floated allows government to become the middleman between those selling electricity and consumers. We should reject the notion and concentrate on creating a system where the consumer has the choice. Municipalities buying power on behalf of the residents and business is simply trading a monopoly system for a government-run system--that's a step backward.

GUS OWEN, Chairman

Fairness for Small Business

Sacramento

*

* Individuals who invest their savings in electric utility stock represent the most conservative of all investors. They opted for a limited (regulated) rate of return in exchange for long-term security.

Contrary to The Times asserting that shareholders have been "more than compensated" for past investments, the very nature of the regulatory rate of return process makes that notion impossible. Past decisions were made based on the understanding that California's electric industry would continue to operate in a regulated environment. Costs were amortized over time, similar to the mortgage of a home.

As we transition, it is important to remember that shareholders upheld their half of the bargain by providing their hard-earned money to pay for infrastructure to provide electricity for anyone who needs it. If we are looking to ensure future private financing in public endeavors, the state of California would be wise to keep its promise as well.

The good news is, facilitating a quick transition to a competitive market will ideally benefit all electricity consumers--including shareholders. Creating that competitive market is possible, however, without forcing electric utility shareholders to lose their retirement income that has already been promised by regulators.

WILLIAM HAUCK

Concerned Shareholders of California

Santa Ana

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