Fortnightly Magazine - March 1 1997

Central and South West Corp. President and CEO Dick Brooks is "extremely disappointed" with a proposed decision by an administrative law judge to increase annual revenues of its subsidiary, Central Power and Light Co., by $7.2 million. CPL in November 1995 had asked for a $71-million hike in retail rates.

A significant factor contributing to the difference is that the judge recommends reducing return on equity from 12.25 percent to 10.9 percent, which would reduce the rate increase by $30 million.

Due to troubles at the Kewaunee nuclear power plant, the Wisconsin Public Service Commission has agreed to allow its three utility owners to accelerate depreciation based on a plant retirement in 2002 instead of 2013. It also agreed to shorten the length of time decommissioning funds can be set aside.

The plant had shut down Sept. 20, 1996, for routine repairs and was expected to open one month later when damage to steam generators was found to be greater than expected. Replacing them would cost about $100 million.

A year after passage of the Telecommunications Act of 1996, more than 440 local phone markets are ripe for competition, says a new report.

According to its second Competition Report, the U.S. Telephone Association says nearly every state has open markets.

In 1995, market-share losses in high-capacity local business service were 39 percent in Philadelphia; 35 percent in Pittsburgh; 32 percent in Washington, D.C.; 27 percent in Baltimore; 39 percent in Los Angeles; 37 percent in San Francisco; 50 percent in New York City; and 37 percent in Boston.

The electric industry hasn't seen so much upheaval since Thomas Edison threw the switch at the Pearl Street Station. Full retail access to competitive markets in generation and supply will challenge traditional ways of doing business. But no change will prove more dramatic for electric utilities than setting a competitive price (em that most fundamental of business decisions.

In anticipation of competition, utilities have been experimenting to discern what forms of the "product" (em electric power (em customers might want, and at what prices. One such experiment is real-time pricing.