Once upon a time, buying electricity and natural gas was so simple. Purchasing from the local utility monopolies -- Pepco and Washington Gas -- was your only choice. The D.C. Public Service Commission (PSC) set the retail rate, which included generation, transmission and distribution costs; determined a reasonable rate of return ("profit") for each company; established reliability, safety and quality of service standards; and enforced consumer protection regulations. You flipped the switch and paid the bill.

The Office of the People's Counsel represented your interests in safe, adequate and reliable service and reasonable, affordable rates -- and, fortunately, will continue to do this and more. D.C. residents have enjoyed safe, adequate and reliable electric service provided by a well-managed and financially viable company. Indeed, it was no accident that at 7.4 cents per kilowatt hour D.C. residential consumers enjoyed one of the lowest electric rates on the East coast. Enlightened regulation and professional consumer advocacy were responsible.

What happened to change all that, and why give up such a good thing? Well, to mention a few factors: industry restructuring, wholesale energy market deregulation, Pepco eliminating any risk to large profit margins by selling its local generation facilities, the eclipse of residential customers' interests by large commercial customers, passage of the D.C. electric restructuring law and the introduction of local retail competition.

In this new era of local retail competition, alternate energy suppliers will be permitted to directly sell you electric power or

"generation." The generation rate ("G" rate) charged by these suppliers, will not be set by the Public Service Commission. Rather, the "G" rate will be determined "by the market" and economies of scale. Of course, that electric power will then be transmitted and distributed to consumers over Pepco's lines. Those costs will be paid by consumers (1) to the suppliers in the form of transmission cost ("T" rate) and (2) to Pepco in the form of distribution costs ("D" rate). These rates will be regulated by the PSC and the Federal Energy Regulatory Commission. (Much the same is true for Washington Gas and the provision of natural gas supply and service.)

Will the unregulated "G" rate, when added to the "T" and "D" rates, produce an overall electric rate lower (or higher) than before? As People's Counsel (the public's lawyer), I am not permitted to use my crystal ball to answer that question. But a survey of electric rates in those states which preceded the District of Columbia into "retail competition," together with a consideration of availability of generated power in the United States, strongly suggest electric rates will increase.

D.C. energy consumers must be educated and informed about their realistic choices and must work to advance and protect their right to be players in the biggest game in town. Residential consumers must be prepared to work together, and in concert with other customer classes, to achieve the most economic prices from the best, most reliable energy supplier. "Aggregation" and "municipal aggregation" are the watchwords for the future.

What is aggregation? Simply stated, it is the process of combining individual purchases of electricity into a single large purchase. There are various categories and types of aggregation, each with its own distinct advantages and disadvantages. Municipal aggregation is a government (i.e., the District) contracting with an alternative supplier to purchase power on behalf of its customers (i.e., D.C. residents). Customer-based aggregation is a group such as a neighborhood, joining to purchase power for resale at cost. Customers can also aggregate through cooperatives, similar to food co-ops.

There is no doubt aggregation will be the best game in town for residential ratepayers.

Individually, residential and small business consumers do not generate sufficient demand (or "load") to attract potential suppliers. The "load profile" for an aggregated group, however, is more attractive since the group needs more power, and the group is more likely to find suppliers with a better purchase deal. In the new competitive market all customers will have to be savvy about weather, load and consumption patterns, load factors, fuel costs, economic fluctuations, interest rates and carrying charges. We will all need to find and attract energy suppliers who will sell power cheaply.

With a properly designed aggregation program, residential consumers could see substantial savings. Absent aggregation, not only could residential and small business consumers miss out on savings, but they may well see dramatic increases in electricity prices.

Large commercial consumers - big businesses - know buying energy in the retail competitive marketplace is all about managing risks. Realizing "deregulation" has increased the cost of energy and that consumers are using more energy, big businesses are increasingly turning to well-paid energy specialist to manage their energy portfolios and to save money.

Today it's no longer the buying of energy that is important - it's the gathering of all the information that allows you to buy it. The tricky question for the District in this new era is who has the responsibility and ability to gather needed information about residential customers, permitting energy to be purchased at the best rate for them?

So, what does this mean for you and for me? As People's Counsel I ask who should "manage the energy-buying risks" for D.C. residential consumers? Who has the responsibility and the resources to purchase energy for residential consumers at economic rates? Who has the obligation to keep a close watch on the inner workings of this retail competition marketplace to ensure it is working for residential consumers?

The answer is OPC and the PSC. But this is an after-the-fact responsibility. First, you as consumers must (1) learn your energy consumption patterns, (2) learn about opportunities to aggregate and (3) make your electric shopping choices wisely.

Energy consumers: It's time to get "jiggy" with aggregation. Consumer education alone will not save you. You may be surprised this comes from a People's Counsel who has long extolled the virtues of consumer education and awareness. But this is really not at odds with the office's longstanding philosophy. OPC will continue to emphasize consumer education and outreach. Much information is needed to wisely navigate the uncertain seas of retail competition. The key becomes what consumers do with this newfound knowledge.

As People's Counsel, I urge you to become an informed energy consumer and shopper. As always, OPC is here to assist you with these daunting tasks. We are increasing our education and outreach efforts, and you should continue to use the office as a valuable resource.

The Office of the People's Counsel for the District of Columbia