OKLAHOMA TO SWITCH OFF ELECTRICAL REGULATION

GREG GATTUSO

OKLAHOMA CITY -- Oklahoma has become the latest state to have a deadline for a deregulated electrical industry.

The state legislature here has approved a bill that would open up Oklahoma's electrical power industry to free-market competition by the year 2002, a move that could save supermarkets an estimated 20% to 30% on their utility costs.

Oklahoma joins California, New Mexico, Pennsylvania, Maine and Rhode Island in having a deadline for deregulation.

Six states -- Washington, Idaho, Illinois, New York, New Hampshire and Massachusetts -- have launched pilot programs to test competitive services, and there are several measures before Congress that would deregulate the $2 billion industry at the federal level.

The Oklahoma bill cleared the state House earlier this month, and was passed last week by the state Senate. The bill is now before Gov. Frank Keating, who is expected to sign it into law. The Electric Restructuring Act of 1997 would require the Oklahoma Corporation Commission to initiate studies into competition issues over the next few years and set a July 1, 2002 deadline for deregulation.

Ron Frost, a spokesman for Fleming Cos. here, applauded the passage of the bill.

"The only disappointment was that we thought it was too long until deregulation came in," he said. Frost predicted that legislation would be introduced next year that would move up the deadline to 1999 or 2000, instead of 2002.

Fleming's two Oklahoma distribution centers spend a combined $1 million on electricity, Frost said. With the electrical industry deregulated, the company could save 20% to 30% on its utility bills.

The typical supermarket in Oklahoma spends $88,000 per year on electricity, Frost said; larger-format supermarkets spend up to $140,000 a year on power. Under deregulation, stores could save $30,000 to $40,000 a year on electricity, Frost said.

Currently, electric utilities are granted monopoly service territories by states in exchange for price and service regulation. Under this structure, all but the largest industrial and municipal customers are prohibited from selecting their electricity provider.

However, in a competitive situation, utility customers could choose from a number of service providers. Customers could also band together to form "aggregate groups" to buy larger amounts of power at bulk rates. Under this system, a supermarket chain or a group of independents could buy power at the same rates as large, industrial customers.

The Food Marketing Institute, Washington, also supports deregulating the electrical power industry.

In 1996, 47 states considered legislation or regulations related to electrical restructuring. At the federal level, a bill introduced by Rep. Dan Schaefer, R-Colo., would require all states to allow customers to choose their own electrical service providers.