FITCHBURG, MASS. - Industrial customers in Massachusetts pay 85 percent more for electricity than the national average, but rates will come down when deregulation kicks in two years from now, according to the state's commissioner of energy resources. ``Prices for electricity ... really have reached almost intolerable levels,'' David O'Connor told industry executives at the Massachusetts Plastics Summit.
O'Connor was joined by officials from two major utilities, Massachusetts Electric Co., with nearly 1 million customers throughout the commonwealth, and Western Massachusetts Electric Co., during a session on energy costs held at the March 27 summit in Fitchburg.
The average rate for electricity throughout Massachusetts is now 9-11 cents per kilowatt hour - 50 percent higher than the national average for residential customers and 85 percent higher for industrial users.
But competition is expected to change that. According to current proposals, customers in Massa-chusetts will be able to choose between competing utilities for electricity by Jan. 1, 1998. The process, called ``retail wheeling,'' is similar to the way long-distance telephone service was deregulated.
Under retail wheeling, a utility that wins a contract will send electricity through the network of transmission lines, using competitors' lines. Current electricity providers will continue to control distribution lines to homes and businesses according to their districts, under their current status as government-regulated monopolies.
John Muro, vice president of retail marketing for Western Mass Electric, said his utility has proposed freezing residential rates in 1998 and 1999. For the following three years, increases would be 10 percent below the inflation rate. Manufacturers would get an additional 5 percent off.
John Dickson, president of Mass Electric, said it is too early to provide specifics on discounts his utility has planned. But he predicted the restructuring will create ``an extremely competitive marketplace.'' Initially, power companies are likely to slash rates to try to win market share, he said.
Plastics companies ``will be very aggressively pursued,'' Dick-son told summit attendees.
``Due to your load characteristics - nice, steady 'round the clock - you're going to be extremely attractive,'' he said.
Dickson said the Massachu-setts restructuring will force utilities to become more competitive. Market forces, not government regulators, will control basic decisions such as whether to build a new power plant.
``This is one of the weaknesses that we think exists in the current regulatory system. This is why we feel very strongly [about] giving you people choice, because we want you in the market to decide if the next plant gets built and what kind of a power plant that might be, and [to] take it out of [the] regulatory scheme,'' Dickson said. ``We believe that this will produce very, very significant savings.''
The three speakers agreed that any new system must provide reliable electricity.
``Although you're very interested in lower electric rates, when you have a power outage, it wreaks havoc in your industry,'' Dickson said.
That was seconded by Geoffrey Kerr, senior electrical engineer at Haartz Corp., which makes extrusion-coated fabrics in Acton, Mass. He said plastics companies need utilities to be more responsive in early stages of an outage, when key decisions are made about machinery.
``We need to know when it goes down, what's going to happen'' when power is restored, he said.
Session moderator Ahren Cohen, president of the South Attleboro, Mass.-based Cumber-land Engineering Division of John Brown Plastics, drew some laughs when he pulled out several candles, a flashlight and batteries - just in case - and placed them on the front table before introducing the speakers.