Electric Industry Restructuring:
Opportunities and Risks for West Virginia

Interim Report No. 4:

Implications for West Virginia Electricity Consumers

CONTINUED

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4.6 Reliability

One of the current debates about the design of a restructured electric utility industry is how to ensure reliable delivery of power to customers. Under a regulated electric industry reliability has been maintained by requiring utilities to meet certain reserve margins and system performance standards set by NERC, regional reliability councils, and utility commissions. These engineering standards have not explicitly considered the economic trade-offs between the costs of providing increased reliability and the costs to power consumers of outages or degradations in power quality. Because most of these standards have been applied on a system-wide basis, the costs of maintaining those standards have been distributed across utilities' customer base with little regard for the varying value that different groups of customers place on reliability.

For example, some manufacturers in industries such as food processing, chemicals, plastics, glass, and primary metals will place a very high value on reliability, because if they lose power it may take several days to clean spoiled or solidified product out of the equipment before production can restart. On the other hand assembly industries have a relatively short restart time and so will value reliability based on production lost primarily during the outage itself. Outages harm residential consumers through loss of convenience more than monetary losses. At some times, such as late at night, residential consumers may hardly care about an outage, but at other times, such as during a mid-summer heat wave, they may care very much.

By unbundling generation from transmission and distribution and introducing competitive markets for generation, electric industry restructuring raises the question of what aspects of reliability can be subjected to market forces and customer choice and what aspects should continue to be regulated to maintain system integrity. In Order 888 FERC has identified a dozen ancillary services that integrated electric utilities have provided in the past to support reliable generation and transmission. (See Table 1.) Under its plan for industry restructuring, FERC divides these ancillary services into those that all customers must continue to take from the transmission provider, those that transmission providers must supply but which customers are not obligated to purchase from the transmission provider, and those that the transmission provider need not offer.

FERC's ancillary services framework still leaves many questions open. Among the ancillary services ISOs and other transmission providers are required to provide, which can they acquire in competitive markets? Among the ancillary services that customers are not obligated to accept from the transmission provider, which services should customers be obligated to acquire elsewhere, and in what quantity? Will the ISOs, reliability councils, utility commissions, some other party, or individual customers decide how much of these ancillary services to consume? NERC and some ISOs (e.g. PJM⁽⁶⁾) intend to continue applying command and control standards to the quantity of ancillary services, such as reserves, provided. On the other hand, market advocates are arguing that customers and suppliers operating in competitive markets can make these choices for themselves as long as they are responsible for the consequences. For a market to decide the desirable amount of reliability, purchasers and sellers must be held responsible for fulfilling their promises and carrying all incurred costs for the desired level of reliability.

The unique characteristics of the electricity industry -- mutual dependence on the reliability and stability of the transmission system, the need to continuously match load and generation, externalities⁽⁷⁾ among electricity suppliers and consumers in the operation of the transmission system -- make deciding between engineering standards and market-based customer choice difficult. On the one hand, if a generator fails to deliver power as contracted or customers consume more power than they've arranged to buy, the system must make up the difference in order to avoid degrading service to all other customers and generators. Similarly, a local imbalance of power supply and demand may require the system operator to redispatch generation to stay within operating limits of the transmission equipment.

On the other hand, markets are the most efficient way to set the prices for reserves and other ancillary services. Electricity consumers are in the best position to assess how much reliability is worth paying for. Suppliers and brokers can determine the reserves they need to meet their obligations, and contracts can stipulate buyout options and financial penalties for nonperformance. Finally, loads without appropriately contracted supply can be dropped or charged punitive rates for emergency power. In addition, there is a risk that minimum standards for reserves could be set arbitrarily high in order to impose extra costs on would-be competitors of incumbent utilities.

4.7 Environmental Issues

A policy of open transmission access and deregulated competitive electricity generation markets will almost certainly increase the amount of coal burned in West Virginia's existing coal plants. Burning coal creates air pollution, in the form of particulates, sulfur oxides, nitrogen oxides, and carbon dioxide. States in the Northeast, including Pennsylvania and New Jersey, are expressing concern about the transport of air pollutants from Ohio Valley producers into their states. Much, but not all, of this can be dismissed as protectionist posturing by high-cost utilities. In addition, atmospheric models are very uncertain about the impact of Ohio Valley electricity production on air quality in the Northeast.

Burning coal in West Virginia undeniably produces an environmental impact in West Virginia. That impact is not limited to air pollution: past coal mining and coal burning have significantly degraded West Virginia water quality, coal truck traffic is tough on West Virginia roads, and strip mining reduces the beauty of the West Virginia countryside. West Virginians must balance the positive economic effect of increased coal production against the negative effect of accompanying environmental degradation on quality of life, and on the state's tourism and forestry industries.

Although increased competition means increased burning of coal, it can also provide a means to reduce pollution in an economically efficient manner through pollution permit trading. With open access, electricity can be obtained from any source, regardless of type of fuel used. The nature and quantity of the pollutant varies with the type of fuel used to generate electricity. The same pollutants are also generated by consumers of energy, such as automobiles and industrial plants. The creation of a market to trade pollution permits across all atmospheric pollutants and among the affected states will equalize the costs of reducing pollution from the various sources of electricity generation and energy consumption across all states in the Ohio Valley and the northeastern United States. In other words, a pollution trading scheme will result in a lowering of the various pollutants to the desired level at a minimum cost to society. Such a scheme of cross pollutant trading among the states is unworkable unless open access is possible in the production of electricity.

Increased environmental regulations usually increase production costs, but this is not a certainty. It is possible that increased environmental regulations may lead to the commercial development of technologies that result in lower long term generation costs. For example, limitations on CO₂ may provide the incentive to develop more efficient fuel cells or nuclear fission. Some states, such as Maine and Massachusetts, are using electricity restructuring legislation as an occasion to impose renewable energy portfolio standards that require utilities to use renewable sources in generating some minimum share (Maine 30%, Massachusetts 4% by 2009) of electricity supplied.

4.8 Effects on Consumer Classes

The effects of deregulation will differ among the various classes of electricity consumers because of differences in location, cost of supplying power, amount of power consumed, consumption patterns, reliability requirements, and market power. Consumer classes discussed in the following sections include residential, low-income consumers, industrial, commercial, and cooperatives. Poor and rural customers consist largely of residential users but are discussed separately because of the importance of the issue.

4.8.1 Residential

Residential customers are the most numerous consumers of electricity, but also the smallest on average. Individually, the have no bargaining power and thus, the restructuring process must pay particular attention to their welfare. Earlier sections of this report discuss the likelihood, but not certainty, that West Virginia residential prices would decline in competitive electricity prices. There are several steps that can be taken to protect residential consumers' interests in a restructured retail electricity market. These include consumer protection regulations, rate caps, energy assistance for low-income households, and procedures to ensure that passive residential consumers benefit from competitive electricity prices. Rate caps were discussed earlier and programs for low-income households will be discussed in the next section.

Consumer protection regulations require utilities and other electricity marketers to deal fairly with residential consumers. Many of these rules are already in place, but some adjustments will be needed in recognition that not all marketers of electricity will be traditional utilities. Consumer protections in residential electricity markets should include registration and performance bonding of power marketers, clear disclosure of rates and terms of service in a standard format, fair and reasonable billing and collection practices (including adequate notice of termination and availability of payment plans), an impartial dispute resolution process, and protections against involuntary changes in provider ("slamming"). Transmission and distribution will continue to be regulated monopolies, and there is no reason to change electricity distribution companies' obligations to provide electricity connections to consumers in their service territories. Many of these consumer protections actually aid the development of competitive residential electricity markets by providing consumers with clear information about their electricity choices and creating an impartial mechanism for enforcing agreements between consumers and marketers of electricity.

Many electricity consumers have expressed hostility to the concept of choice, and some customers will most likely decline to make an affirmative choice of supplier. In the public debate over this issue, this type of customer has been dubbed the "default" customer or, more kindly, the "patient" customer, but this portion of the Report will refer to him/her as simply "choice-averse." There is considerable interest in choice-averse customers because their number is presumed to be large, and they are the customers least likely to gain from the move to competitive markets. Sellers wish to have them as customers, and there is a belief among some regulatory authorities that they deserve some protection. Several proposals have been offered for these customers, which we will critique in this section before offering a proposal of our own.

Let us first define the crux of the matter. The choice-averse customer is a customer who does not want to choose a supplier and, because of his decision not to choose, he will (perhaps willingly, perhaps ignorantly) pay a premium for his service. Is this a mistake that the customer should be protected from making? If so, how? If not, who gets to collect the premium?

Some parties suggest that these are not passive "default" customers; they are satisfied customers of their current utility and their choice to stay with their current supplier should be respected. One answer to this argument is that these customers' aversion to choice may arise from their satisfaction with the terms of the regulatory compact, not with the utility company per se. The unregulated generation supplier is not the same entity as the regulated electricity system, and its right to serve them without their affirmative choice is unclear.

Others, especially those who wish to enter the market, suggest that the choice-averse "premium" would be distributed more equitably, and the appearance of a competitive market achieved, if the customers of the incumbent utilities were allocated at random among a group of certified suppliers. Such a policy simply spreads around the benefits to a different class of suppliers, and may be especially annoying and troublesome to the customers who really do want to stay with the incumbent utility. Although a potential market entrant's frustration over customers' inertia is understandable, the appearance of competition is not to be confused with the real article. Competitors serve the public interest by attracting customers through superior marketing and superior service, not by receiving a regulatory dealing of the cards.

Still others suggest that the Commission offer a regulated rate to all customers who do not choose a supplier. This rate would presumably be set on the basis of the historical embedded cost of service. The problem with a rate set in this way is that the competitive market price available to customers will continue to fluctuate according to supply and demand. When the market rate rises above the regulated rate, both choice-averse and choice-oriented customers will pay the regulated rate and avoid the market. Producers will be discouraged from entering a market in which they have no customers when the market price is high. When the regulated rate is above the market rate the choice-averse customers will continue to pay the (higher) regulated rate, while the choice-oriented customers will pay the lower market rate. Choice-averse customers are not especially well-served by a regulated price when the market price is lower. The policy would discourage competition and disrupt the market, without necessarily benefitting the patient customer.

If policy makers decide that the public interest requires the protection of choice-averse customers, it need not unduly disrupt the market in order to do so. One alternative is for the Commission periodically (annually, or every other year) to request bids from market suppliers for the privilege of serving choice-averse customers. The outcome of the bidding process would be a contract with the regulator's stamp of approval, available for all customers who want it, as well as those who make no choice. The contract would be to supply the customer's requirements at a fixed rate and for a fixed term of at least one year. This proposal is similar to the Retail Market Area (RMA) proposal currently under consideration in Ohio.

This alternative has at least three advantages. First, because the rate is set competitively and changes slowly with the market over time it would not unduly distort or disrupt the market. Those customers who affirmatively choose the "choice-averse rate" will be choosing a market-based contract rate, not a rate based on historical cost. Second, if the number of choice-averse customers is large then the contract will be an attractive prize, and the request for bids should attract favorable terms from competitive suppliers. Sellers will not be able to shift price risk onto choice-averse customers, except to the extent that is agreeable to the Commission and compensated by the market. Third, the opportunity to obtain this contract would provide a mode of entry for competitors into the market. Customers who are satisfied with the vendor that wins the contract are more likely to choose that vendor affirmatively when the contract expires. This competitive rotation of choice-averse customers would awaken customers to the possibility and advantages of choice more effectively than would a random reshuffling. It would foster real competition, not the appearance of competition.

One danger of this approach is that customers might perceive it as "slamming" perpetrated by regulators. Certainly, the opponents of Ohio's RMA proposal have aggressively promoted this perception. It is true that some customers who are satisfied with the current system are likely to be upset to find out that their generation supplier has changed without their explicit approval. Clearly, if the Commission decides to implement such a proposal it will need either to educate the consumers that it is trying to protect, or face their wrath. To educate the consumer, the Commission might, for example, make sure that the customer's power bill is clear that the former utility continues to provide transmission and distribution service. The Commission might also require that the bill contain a statement of the savings achieved by purchasing from the RMA provider, compared to the next lowest bid, and compared to the bid offered by the former utility. The bill should also contain the information that the customer needs if she wants to opt out of the RMA and choose the former utility, or some other generation supplier. This comparison and opportunity to choose would help educate the consumer about the market and encourage her to participate actively.

Some object that this policy would put the Commission "in the business of power supply." This is misleading, since the Commission would simply organize a bidding process, declare a winner, and certify its outcome as competitive. It would have no more role in the details of power supply, such as dispatch or active buying and selling, than it does today. Besides, the decision to intervene in the market is made when policy makers elect to defend the choice-averse customer. We do not necessarily advocate the decision to intervene -- choosing not to choose can be a perfectly rational decision in which the government need not involve itself. But if the government does choose to become involved, it should choose a tool that performs the desired task effectively without disrupting the ability of the market mechanism to do its job effectively for the rest of the market participants. A supervised bidding process is just such a tool.

Some utilities object to the Ohio RMA proposal because it in the event that there is no acceptable market bid, the proposal would hold the former host utility responsible for providing the power supply at the former regulated rate. This objection has some merit, as the Ohio proposal would put the utility at some downside risk, without creating any upside opportunity. However, it may be possible to reduce or eliminate the excess risk by relaxing the requirement that the rate be capped at the former regulated rate.

This issue of the disposition of the choice averse customer is a good example of the general dilemma West Virginians face in a restructuring industry: What appropriate regulatory tools remain, if we choose to rely primarily on market forces to defend the public interest? If we decide that market forces are the best guarantor of the public good, we must choose regulatory tools, such as open bidding processes, that will reinforce those market forces rather than undermine them.

4.8.2 Poor and rural customers

A topic of major concern regarding deregulation is how the poor and individuals in difficult to serve areas will obtain electrical power at affordable rates. Electric power is considered a requirement for a desirable standard of living in the United States. Electric utilities currently make special dispensation for residential customers unable to pay their electricity bills. This dispensation, in whatever form it may take, has a cost that must be paid by someone.

Also, rural customers are more expensive to serve than urban customers simply because there are fewer customers per unit of distribution line. The current regulatory system allows higher rural service costs to be averaged with the lower urban service costs to determine a single rate that is paid by both urban and rural users.

The voters of West Virginia have determined that it is socially desirable for these schemes to exist. The current system pays for these costs in three ways. The state uses a tax credit to fund a 20 percent rate discount from November 1 through March 31 for recipients of Temporary Assistance to Needy Families (TANF), Supplemental Security Income (SSI), and food stamps if the recipient is over 60. The tax credit covers the entire cost of the discount and is taken against the business and occupation or generation tax. Second, the federal Low Income Home Energy Assistance Program (LIHEAP) block grant and related state and charitable funds assist eligible low-income households in meeting their energy needs, including heating and cooling assistance, energy crisis intervention, and low-cost weatherization. The remaining costs of providing low-income and rural service are included in the rate base and paid by other electricity customers. This system now works because utilities are permitted to pass through such costs to other paying consumers. Most states have relied on the regulated rate base to pay the bulk of costs for socially-mandated subsidization of electricity costs.

However, spreading the costs of rural service and low-income assistance across all ratepayers will be more complicated in a competitive generation environment. Under competition no producer would be willing to provide service for less than the market price, which reflects all costs of generation, transmission, and distribution. The problem, then, is how to preserve the social benefits of universal service with a deregulated electricity generation industry.

The remaining question is how to pay for other socially mandated benefits delivered through the electricity industry, once competition and choice makes it impossible for power generators to charge customers more than the market price. This question applies not only to low-income assistance, but also to other activities mandated by some states, such as promotion of energy efficiency, demand-side management, aid to renewable energy sources, and research and development. The desirability of subsidizing one or all of these areas is another matter; given that decision, what is the best way to fund the costs?

Most plans envisage that the subsidy would be tacked on as a surcharge to the distribution rate. We must recognize that such plans will increase the cost of electric power, which will reduce the usage of electricity, and may reduce the efficiency of the distribution system. For example, because the additional costs of rural service are in distribution, a restructured electricity industry could cover these costs by averaging the still-regulated tariffs for power distribution. However, this strategy does reduce economic efficiency because the price a consumer pays for distribution will not be the same as the costs of providing that distribution. For example, reducing the price of operating a household in rural locations will increase the number of homes in remote rural locations, thereby increasing society's total costs for electricity distribution.

As a general principle, the most economically efficient funding schemes do not influence consumers' choice of how much energy to consume, what kind of energy to consume, or where to buy that energy from. Thus the most efficient way to fund low-income electricity assistance is with general tax revenues. West Virginia's current benefit funding scheme is actually close to this ideal. The tax credit that funds the state's 20 percent low-income rate discount represents foregone general tax revenue. Thus, the state's general fund pays indirectly for those costs. Similarly, the LIHEAP block grant and related local funds pay for low income energy assistance without imposing costs that electric utilities must pass on to other customers. West Virginia's strategy for paying for low-income energy assistance should continue to work well in a restructured industry. Once restructuring splits power generation from distribution and permits new providers to enter the residential electricity market, it will be necessary to clarify which part(s) of the industry provide the rate discount and claim the tax credit. To the extent that West Virginia utilities rely on the rate base to pay the costs of other low-income assistance, in the future such costs should be funded with direct grants or an expansion of the tax credit.

A second-best funding scheme is to levy a broad-based charge that applies to all energy sources and all energy producers -- broad-based so that the rates are not too high and applying to all sources equally so that consumers' choices among suppliers are not biased. Most states (California, Connecticut, Illinois, Maine, Massachusetts, Montana, New Hampshire, Oklahoma, Pennsylvania, Rhode Island) that have passed electric industry restructuring legislation have adopted this approach by imposing non-bypassable social benefits charges on the still-regulated distribution charges⁽⁸⁾. In the best cases (e.g. Illinois, Montana), a comparable charge is planned for natural gas distribution. Social benefits charges vary in level and form, including mills per kWh (ranging from 1 mill to over 5 mills), customer charges, and percent of utility revenue. In some states, these proposed charges will also fund energy efficiency programs, renewable energy, and research and development. Some of the states are leaving administration of low-income assistance programs to the utilities while others intend to manage the funds through third-party agencies. Proposed federal legislation also includes national social benefit charges. For example, the Clinton administration's proposal includes a 1 mill public benefits charge.

The Connecticut restructuring legislation has a provision calling for a state power purchasing pool to negotiate electricity purchases for all state agencies. In addition to state agencies, all households that receive means-tested assistance from the state or federal government will be eligible to participate in the state purchasing pool with "the same benefits and rate discounts available for state agencies." This uses the state's purchasing power to get the best possible competitive electricity prices for low-income households and is similar in some ways to the proposal for state aggregation of choice-averse customers discussed in the previous section.

4.8.3 Industrial

West Virginia's mix of industries reflects its history of abundant, low-cost energy resources, especially in manufacturing. In 1995 West Virginia utility revenues for sales to industrial customers averaged 4.03 cents per kWh. Table 2 shows that this price is lower than the national average and the averages in all of the adjoining states except Kentucky. Some of the states to the northeast, notably Pennsylvania, New Jersey, New York, Connecticut, and Massachusetts, had considerably higher average industrial prices.

Manufacturing plants with large electricity requirements will locate where electricity prices are lowest, if all other costs and locational advantages are equal. In practice, with other factors influencing location and investment decisions, there is still a tendency for electricity-intensive industries to concentrate where electricity prices are low, but the pattern is less clear-cut. Table 3 identifies the fifty most electricity-intensive industries in the national economy. The column labeled "US Input Coefficient" shows the share of each industry's output in dollars that the industry spends on electricity purchases. For example, for every $1,000,000 of aluminum produced an average of $204,700 will be spent for electricity used in the production of that aluminum. The location quotients listed in the last column are a measure of West Virginia's specialization in the listed industries. The location quotients compare an industry's share of West Virginia employment to that industry's share of national employment. A location quotient of 1.0 means that an industry is the same share of the state economy as it is of the national economy, 2.0 means that the industry has twice the share of state employment as it does of national employment, and 0.5 would indicate that the industry's share of state employment is only half its national share. Thus, location quotients greater than 1.0 indicate specialization in the industry in comparison to the national economy.

The most striking result in Table 3 is that West Virginia is very specialized in several electricity-intensive industries. Primary metals manufacturing stands out as a group of highly electricity-intensive industries that West Virginia specializes in. These include aluminum; electrometallurgical products; steel mills; and brass, bronze, and copper foundries. Stone, clay, and glass products, including cement, mineral wool, glass containers, porcelain electrical supplies, and ground minerals, are another group concentrated in West Virginia. The state also specializes in several chemical and related industries, carbon black, industrial organic chemicals, miscellaneous inorganic chemicals, and carbon and graphite products, that are large consumers of electricity. With the notable exception of coal, West Virginia does not specialize in the many mining industries listed in Table 3, because the state does not have the necessary geological resources.

A second way to examine the importance of electricity as an input to industrial and commercial sectors of West Virginia's economy is to identify the sectors with the largest electricity purchases in the state. Table 4 lists the state's top twenty-five electricity-consuming sectors in 1994.

The magnitude of these sectors' electricity purchases are determined by a combination of their electricity-intensiveness, indicated with the input coefficients in the second column of the table, and their overall size, measured by industry output in the third column.⁽⁹⁾ Therefore, it is not surprising that primary metals; stone, clay, and glass; chemicals; and coal mining industries appear in Table 4 as they did in Table 3 Some of the other sectors -- wholesale and retail trade, transportation, health care, and banking -- make the list because they are pervasive in the economy rather than especially electricity-intensive. These predominantly local-market oriented sectors do not have the same sort of potential for regional concentration as manufacturing industries. However, their presence in Table 4 is a reminder that commercial sectors are important consumers of electricity. There are also two manufacturing industries not in Table 3 that make it onto the list in Table 4 because of their size in West Virginia's economy. These are sawmills and miscellaneous plastics products (as well as the closely related plastics materials sector of the chemical industry). Both wood products and plastics products are important elements of the state's industrial development strategy and have shown strong employment growth in recent years.

The data in Table 5 give an indication of the importance to West Virginia's economy of major electricity-consuming manufacturing industries identified in Tables 3 and 4. In combination primary metals; chemicals; stone, clay, and glass; wood products; and rubber and miscellaneous plastics products account for 56.4 percent of total West Virginia manufacturing employment in 1996 and 71.7 percent of manufacturing gross state product (GSP) in 1994.

Having established the importance to West Virginia's economy of industries that consume large quantities of electricity, what are the likely effects of electric industry restructuring and competition on the state's competitiveness in those industries? The effects of competition will drive down the electricity prices paid by industrial customers regionally. At the same time, freer trade of electricity among states in the region will reduce the present disparities in industrial electricity prices (see Table 2), because low cost electricity producers will be able to increase their sales to customers in high-cost states. Overall, industrial electricity prices will probably come down in West Virginia, but not by as much as in nearby states with higher prices.

Even though West Virginia has a high concentration of electricity-intensive industries in its economy, the net impact of these shifts in industrial electricity prices on the state's economic development is likely to be small for several reasons. First, as electricity prices converge and come down in general, the competitive importance of the remaining regional differences in those prices will decrease because electricity will become a smaller part of businesses' overall operating costs. Second, while West Virginia's relative price advantage compared to higher price states will decrease, it will not disappear entirely, because the low cost electricity generators will still have to pay transmission costs in order to sell to those higher-priced states. Furthermore, there are some states in the region, notably Kentucky, with lower industrial electricity prices than West Virginia, and those price differences are also likely to shrink. Third, most of the economic development impacts will operate through business decisions on where to place new investments. This will spread the impacts over many years, especially in industries such as primary metals where very few new plants are being built.

Finally, West Virginia's economy is not isolated from the health of the economies of nearby states. When other states in the region flourish, West Virginia's economic development benefits as well. This works because of the many economic linkages that cross state lines. Businesses supply and purchase from one another, employees commute or migrate across state lines, and branch plants and back office operations are spun off from growth centers to adjoining regions with more available labor and less expensive real estate. The overall decrease in electricity costs makes the entire region more competitive, benefitting West Virginia along with the other states. Furthermore, West Virginia's competitors for industrial investments are not necessarily in the region. For example, most of the competition for investment in the state's chemical industry is coming from the Gulf states and even from overseas.

There are two specific aspects of electric utility restructuring where policy choices have yet to be made that will influence the extent to which West Virginia keeps or loses the economic development advantages of comparatively low electricity prices. The first of these is the pricing of transmission. Uniform "postage stamp" transmission charges in a transmission system operating across a broad region would result in more uniform electricity prices than alternative transmission pricing schemes based on actual marginal cost, distance, or zones. The combination of a single power exchange and postage stamp transmission pricing could result in a single wholesale price for power across an entire region, because the power exchange would equalize the price paid to the generators and the postage stamp pricing would equalize the charges for transmission. The second policy choice is whether West Virginia will introduce retail competition in electricity. Retail competition would strengthen the downward pressures on industrial electricity prices by introducing market forces for efficiency and cost-cutting into electricity marketing as well as generation. If West Virginia introduced retail competition while some other states did not, that would help to maintain the state's advantage of relatively low industrial electricity prices. Conversely, if other states, but not West Virginia