Allen J. Keesler Jr. has spent several years preparing Florida's second-largest electric utility for competition. St. Petersburg-based Florida Power Corp. has trimmed 1,200 jobs since the early 1990s. In an interview with Times staff writer Robert Trigaux last week, Keesler acknowledged the frustration of moving the utility through a period of gradual deregulation. His preference: Give utilities a level playing field with competitors and let the games begin. Here are highlights of the interview:
Q: The electric utility industry is changing. What trends are developing?
A: First is opening up the wholesale electricity market. Second is opening up transmission lines to anyone that wants to use them. Third is stranded investment, or: How do utilities get back the money they put into power plants that are no longer needed?
Another is allowing nearly anyone to generate electricity. And the fifth trend concerns how states react to federal deregulation of the industry.
Q: Let's take one at a time. In wholesale competition, you have lost a few municipal utility customers.
A: Tampa Electric is serving a couple of customers we have historically served. But the wholesale market is not a big piece of our business. I think we will see independent power producers and out-of-state power marketers eventually vie for business.
I am very competitive. That's why I want this industry transition toward free competition and a level playing field for utilities to take place as quickly as possible. I worry that will take a long time to be reached.
Q: Understood. What about new federal rules to open your transmission lines to others?
A: The Federal Energy Regulatory Commission says we must let other power producers use our transmission lines for the same price as our existing customers. But today the price of building transmission lines is many times that of our older lines. So do we increase the price to existing customers for some new line when it only benefits a new customer?
I think we have built ourselves into a stalemate when the FERC controls transmission lines but we must go to the state Public Service Commission to get approval to build them.
Q: What about another headache _ stranded investment?
A: Utilities used to build plants with the blessing of regulators. Now many of those plants cannot compete against more efficient plants. That leaves utilities with stranded investments.
Some utilities have a lot of money in nuclear plants that now find it difficult to compete with the new combined-cycle generation plants. How do you recapture the money already invested in the older plants? England has one idea: Require utilities to purchase a percentage of their power from existing nuclear plants.
Q: What happens now that anybody can go out and generate their own electricity?
A: It's been easy for regulators to insist on social programs by utilities that cost a lot of money and maybe did not bring direct economic efficiency to all users of electricity. Now there are new power producers. If we are all to compete, then we must do so on a level playing field, with the same rules.
Q: How will Florida deal with the federal push for more open competition?
A: The Florida Legislature looked at retail "wheeling" (to let residential and small business customers have more choice in electricity providers) in the last session and probably will again. In the Southeast, I don't see the big push for retail wheeling that I see elsewhere in the country where rates are much higher.