Editorial: Deregulate power firms reasonably

The Legislature is moving in the right direction as it drafts a plan to deregulate Nevada's power market. The Senate Commerce and Labor Committee is recommending that while deregulation of electric utilities should start on March 1, 2000, electric customers should have their rates frozen until March 1, 2003.

The rate freeze is especially important for residential and small business customers. Unlike big businesses, which will be courted in a deregulated market and offered price reductions as large users of electricity, smaller customers may not be offered better prices and could even end up paying more than they do now. In addition, since rates in Nevada already are comparatively low, residential customer rates likely wouldn't drop dramatically under deregulation as they would elsewhere, especially in states that rely on more costly power sources, such as nuclear power.

Market purists will argue that deregulation should occur at once without any government intervention, including the establishment of a rate cap. The problem with this thinking is it ignores the reality that for nearly all of this century utilities have been heavily regulated monopolies, which means customers have not had to shop around for their electricity and develop the savvy needed to buy power in this volatile market. The Senate Commerce and Labor Committee's plan does permit customers to leave and use a new electric provider if they desire, but there is nothing to force them to leave the existing company that serves them.

The sudden deregulation of the long-distance phone industry during the 1980s should serve as a cautionary reminder about the pitfalls involved in deregulating a monopolistic industry. Instead of residential customers being immersed totally into what could be a frigidly cold deregulation pool, the Senate Commerce and Labor Committee's plan is more reasonable, allowing a Nevada homeowner to dip his toe and test the waters first.

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