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Fortnightly Magazine - May 15 1995

Deregulation or Bust?

For better or worse, deregulation is now a factor in the electric utility industry. As a general proposition, deregulation makes for increased competition, which in turn will trim costs for consumers. Deregulation of the electric industry means that utilities face the prospect of freezing or reducing rates to retain market share. Stranded investments and the burdens of above-market supply contracts and construction and development contracts (especially nuclear-related contracts) will place additional pressure on these utilities and further reduce their revenue.

Byline: 
Jay M. Goffman and John R. Ashmead
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Protectionist State Coal Law Struck Down

The U.S. District Court for the Southern District of Indiana has declared portions of the Indiana Environmental Compliance Plans Act unconstitutional, striking down those sections that favor use of Indiana coal. The Act authorized Indiana to preapprove compliance plans files by electric utilities in response to the Clean Air Act Amendments of 1990 (CAAA), requiring the plans to favor coal mined in the state. The district court ruled that the Act violates the commerce clause, finding that the challenged portions sought to eliminate or limit use of western coal.

Byline: 
Lori A. Burkhart
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Comparability: Lost in the Clouds

In the consolidated case involving American Electric Power Service Corp., the Federal Energy Regulatory Commission (FERC) reiterated its new rule on comparability, instructing the parties to address the "different uses that a transmission owner makes of its transmission system" and to offer comparable use to others, without impediments, at

a comparable cost. But what, exactly, are those "different uses"?

Byline: 
Wallace Edward Brand
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Perspective

The electric power industry is mutating all over the globe. We can analyze, study, and compare, yet no single and universal model has emerged in any country. Each has developed a solution of its own.

The restructuring of the U.S. electric power industry has provoked a strong response here in Canada, but few seem to care that a U.S. solution could prove ill-advised on this side of the border. The structures of electric industries are fundamentally different in both countries.

Byline: 
Denis Tanguay
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RINs: Better Learn This Acronym

It's d‚j… vu all over again.

After Congress enacted the Clean Air Act Amendments of 1990, the electric utility industry focused considerable attention on what seemed the key provisions of the acid rain program: e.g., emission allowance trading. In contrast, the highly technical, seemingly innocuous continuous emission monitoring (CEM) provision received scant attention (em only a few engineers took notice. We now know that emission trading and other supposed key provisions had only a modest impact on utilities.

Byline: 
Steven A. Mitnick
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Open-Access NOPR Rocks Industry

The Federal Energy Regulatory Commission (FERC) has issued its comprehensive notice of proposed rulemaking (NOPR) designed to move the wholesale electric industry to a more competitive marketplace. The order, Open Access Non-discriminatory Transmission Services by Public Utilities and Recovery of Stranded Costs by Public and Transmitting Utilities, weighs in at over 300 pages (Docket Nos.

Byline: 
Lori A. Burkhart
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Real-time Pricing, Not Restructuring

Real-time Pricing, Not Restructuring

Richard Abdoo's article, "Wisconsin Electric's View of a More Competitive Industry," (Feb. 15, 1995), brought this quote to mind: "We trained

hard. . . . But it seemed that every time we were beginning to form up into teams we would be reorganized. I was to learn later in life that we tend to meet any situation by reorganizing; and a wonderful method it can be for creating the illusion of progress while producing confusion, inefficiency, and demoralization" (Petronius (em 256 BC).

Byline: 
Mark B. Lively
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Financial News

Annual Annual EPS

Close Close Percent 52-Wk 52-Wk Div Div Book P/E Last

Company Region 09/30/94 12/30/94 Change High Low Rate Yield Value Ratio 12 Mos. Electric Utilities AEP Company Inc. Midwest 32.88 31.75 3.42 35.75 27.25 2.40 7.56 22.68 12 2.71

Unicom Corp.

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Frontlines

Everybody's talking about electric utilities dabbling in telecommunications. That's fine. But how about vice versa? Maybe what we've really got is telephone companies (and cable television, too) getting into energy. That's different.

Byline: 
Bruce W. Radford
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Electric Utilities: Steering Clear on the Information HighwayJames H. McGrew

One of the most exciting challenges facing electric utilities is the opportunity to participate on the so-called "information highway." Not only is the technology evolving at a dazzling pace, but the opportunities to make or lose money will be staggering. The growth in sales of electricity has been and will be relatively slow compared to the dynamic growth in sales of cable television, information, online, cellular telephone, and other telecommunications services.

Byline: 
James H. McGrew
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