To help gas customers take advantage of unbundled services, the New York Public Service Commission has authorized National Fuel Gas Distribution Corp. to modify its existing firm transportation service procedures to allow marketers to gain access to a share of utility storage capacity, for use in delivering the required volume of gas to the city gate.

In another ruling, the commission approved a similar, but less innovative storage proposal for firm transportation customers served by Central Hudson Gas & Electric Corp.

Each is unique, whether big or small, niche or mass-market.

Downsizing. Deregulation. Open access. That ought to boost both supply and demand for utility consultants, as unemployed middle managers seek out new careers and utilities struggle to survive in a more competitive and faster-moving environment.

However, since consultants come in many colors, which is right for you and your company?

Diversified Monoliths

As the giants of the consulting world, this category includes firms such as McKinsey, Andersen Consulting, The Big Six consultancies, and Booze-Allen.

As marketers discover, some LDCs keep a strong grip on the residential class.

Michael Meath of Agway Energy Products has a dream. A dream to tap the 4.5 million natural gas customers in New York State, supplying commodity and then, other services.

New York state unbundled gas rates in March 1996, with new tariffs approved later that year. Since then, just 11,000 customers out of 4.5 million (em less than half a percent (em have decided to use aggregated transportation service.

Not all New York utilities have filed customer aggregation programs, however.

Competition abounds at wholesale, but retail is another story.

Will geography, politics and regional economics stand in the way of real choice for electric consumers at the retail level? Consider this tale of two power players.

One competitor, the Indiana Municipal Power Agency, is proud of itself. In its annual report, IMPA says that open access and competition in the wholesale market allowed it to trim wholesale rates for power it delivered to member distribution companies in 1996. "The results were remarkable," the report reads.

All three may apply, especially if regulators go wrong and let ISOs make the business decisions.

Electricity transmission is a real business. With more than $50 billion of net plant, another $3 billion annually in capital expenditures and yearly operating income that could reach $5 billion per year under normal circumstances, the power grid is roughly twice the size of the natural gas pipeline industry. One would never know that from current events, however. Utility management treats transmission as an inconvenient stepchild.

Locational marginal pricing, even if "complex," is well worth the benefits.

In two recent issues, PUBLIC UTILITIES FORTNIGHTLY featured editorials %n1%n on restructuring of the PJM Pool. Those two articles described proposals by the so-called supporting companies, %n2%n seven members of the Pennsylvania-New Jersey-Maryland Interconnection, to use a "locational marginal pricing" model for congestion pricing for electric transmission and to continue PJM as a "tight" power pool.

Divide the grid by usage (em local vs. regional. Apportion costs accordingly, to energy customers by fixed charge, and power producers by flow and distance.

Traditionally, utilities have received transmission costs through an average, rolled-in access fee, or postage-stamp approach. In a deregulated environment, that approach will lead to distorted pricing.

And not just because of transmission-line congestion.

Much of the current debate over electric transmission pricing has centered on the various competing methods of congestion pricing, such as zonal vs.

I sincerely appreciate your covering NARUC and its outlook in the July 15, 1997, issue of PUBLIC UTILITIES FORTNIGHTLY (p. 26). I believe your summarization of my conversation with your Associate Editor and his depiction of NARUC sends a clear message about the unmatched resources and capabilities our organization enjoys by virtue of its membership.

Overall, the article generally captures the essence of our conversation. Nevertheless, it missed on my characterization of the NARUC staff's intended role with respect to the revitalized Washington Action Program.

Your article in the July 1, 1997 issue of PUBLIC UTILITIES FORTNIGHTLY regarding co-ops and competition was very much on target ("Co-ops and Competition: Still a United Front?" p. 16). Our firm spends a significant amount of time providing financial advice to some of the more progressive rural electric cooperatives and have had some association with a few of the organizations mentioned in your article.

We are strongly pro-cooperative. Co-ops continue to provide high-quality electric, gas and other services to significant numbers of Americans, both rural and urban dwellers.

As one of the early voices in the "reliability debate," urging all of us not to lose sight of the importance of reliability of electric bulk power supply (see, for example, my article in the Oct. 11, 1990, issue of PUBLIC UTILITIES FORTNIGHTLY, on the occasion of the 25th Anniversary of the Northeast Blackout of 1965), I applaud the FORTNIGHTLY for sponsoring a forum on "Reliability, Transmission and Competition" in its June 1, 1997 issue (p. 45). By doing so, your magazine has provided an important public service.