Two Utilities are Better Than One

DATELINE: LUBBOCK, TEXAS. "This bill is simply too high," Alma Jones told the customer service representative on the phone. "Last year's July electric bill was half this amount despite the hotter weather."

"I'm sorry, Mrs. Jones," the representative responded, "but our bill simply reflects the meter reading for July."

"Well, your meter reading is wrong," Mrs. Jones replied, "and I want to speak to the customer service manager."

"Mr. Wilson is away from his desk," cooed the cool voice on the phone.

"Well, then, I want a meter reader to come out and check his figures. Something has to be done!" Mrs. Jones was on the verge of tears.

"That isn't possible at this time, Mrs. Jones," the impersonal voice continued, "but our field service representative will be making his regular rounds in two weeks."

"I can't wait two weeks!" Alma Jones cried desperately into the phone. "If you won't resolve this mess today, I'm changing companies!"

"As you wish, Mrs. Jones," the faceless voice retorted.

A woman of her word, Alma Jones slammed the receiver into place just long enough to disconnect that sweet voice. Picking it up again, she dialed the other electric company. "I've paid my last bill to the competition," she informed the service representative who answered. "I want my electric service changed immediately." Three days later, Mrs. Jones was the happy customer of another electric utility, which she believes responds more positively to her requests for assistance.

Though the details of this little scenario are fictitious, such calls take place routinely in Lubbock, Texas. In this west Texas city, consumers enjoy the benefits of competition between Lubbock Power and Light (LP&L) and Southwestern Public Service (SPS) Company. The two companies compete for business despite the preachments of economists who swear by Lord Keynes that competition cannot work in the electric utility industry.

And Lubbock is not an isolated case. Competition between a municipally owned and an investor-owned utility— what economists call a "duopoly" situation—exists in other cities and towns across the country.

HOW IT WORKS IN LUBBOCK

The competition in this city of some 200,000 residents is active and fierce. LP&L and SPS enthusiastically push and pull for customers in an open market. Yet the rivalry is basically a friendly, cooperative one, I found out on a visit to Lubbock last spring. At least, that's how the two men running the respective operations described it to me over lunch at the country club.

Carroll McDonald is director of sales and service for city-owned LP&L, while Jake Webb serves as district manager for investor-owned SPS (which operates in three states besides Texas). Interestingly, McDonald spent 26 years with SPS before moving over to LP&L two years ago.

"Conceivably, a customer could change service every three days," McDonald told me, though frequent switching is quite uncommon. But the procedure for switching is quite simple. A company sales representative fills out a form for the customer who wishes to change service, and a copy goes to the competition. Every morning at 7:00, an LP&L and an SPS employee stops by the competing firm's offices, a block apart, and picks up an envelope containing the notices of orders for service change. Each company then has 24 hours to convince its customers not to change service.