Downsizing has trimmed the work force, but utilities may have given up those savings by going outside to purchase labor, goods and materials. Electric utilities might be overlooking the obvious (em the rapidly increasing costs of purchased goods and services (em while trying too hard to trim internal costs through downsizing and personnel cuts.

While utilities cut labor costs by less than 1 percent per year from 1992 to 1995, the costs of purchased goods and services rose by an average of more than 4 percent each year (see Chart 1), according to a study of utility economics by A.T.

The Pennsylvania Public Utility Commission has authorized PG Energy Inc. to implement several tariff modifications

regarding balancing charges and transportation service requirements.

It permitted the LDC to impose a balancing charge of $0.66/Decatherm per unit of imbalance on transportation customers and aggregators whose actual daily deliveries of gas vary by more than 2.5 percent of requirements. The commission rejected a proposal to reduce the balancing charge to account for the offsetting nature of usage among transportation users as a whole.

The Ohio Public Utilities Commission has rejected a request by Cleveland Electric Illuminating Co. to expand its competitive discount pilot program into the western portion of the city. The program currently targets commercial customers in the eastern side of the city.

While finding that competition does exist "to some degree" on the west side of Cleveland, it does not encompass the entire area targeted by the utility's proposal, the commission said.

In the first major rate proceeding under a new state law bringing competition to the wholesale electric market, the Texas Public Utility Commission has ordered Central Power and Light Co. to accelerate recovery of above-market generating investments and reduce and unbundle its rates.

The commission said the aging of existing electric facilities and the development of new technologies were driving generation costs down.

Citing concerns about gas price volatility, the New Jersey Board of Public Utilities has ruled that Public Service Electric and Gas Co. should maintain its existing annual fuel cost adjustment mechanism rather than shift to a monthly charge as originally proposed for its local gas distribution customers.

Under a settlement approved by the board, the LDC will have the option to impose the monthly charge on its general-service and large-volume customers.

The merger of Baltimore Gas and Electric Co. and the Potomac Electric Power Co. will not harm consumers by restraining competition in the electric market, according to the Maryland Public Service Commission.

The commission approved the merger provided Baltimore Gas and Electric lowers its customers' electric rates by $43.876 million and PEPCO lowers its Maryland customers' rates by $12.101 million. The competitive effect of the merger was still under examination at the federal level.

Dominion Resources touts its "impacted" method, but opponents call it a "stalking horse" (em a scheme to avoid full review at FERC.

Is the Federal Energy Regulatory Commission prepared to accept true marginal-cost pricing for electric transmission?

With all the criticism leveled at the traditional "contract path," one would think that the FERC would consider a new approach to transmission pricing.

In fact, last year in its final Order No.

Sound bites from state and federal regulators.

IntraLATA Toll Calling. North Carolina says newly certified competitive local exchange telephone carriers must apply for separate authority to provide intraLATA toll services, even though incumbent local carriers need not do so. Docket No. P-100, SUB 133, March 31, 1997 (N.C.U.C.).

Dialing Parity. Oregon PUC adopts policies on telephone dialing parity to allow all telephone users who choose alternate carriers to make calls without dialing extra numbers. Order No. 97-107, March 18, 1997 (Ore.P.U.C.).

Payphone Subsidies.

Moody's Investors Service has released a report that finds the most significant long-term implication of Order 888 for investors is for potential divestiture of transmission assets by investor-owned utilities.

The Moody's study, FERC Order 888 and Wholesale Competition: Catalyst for a New Market Model, also finds that divestiture by a vertically integrated utility may leave bondholders secured by a lien on relatively risky generating assets of often questionable market value, as opposed to the presently more diverse and balanced asset portfolio.

Senate Energy and Natural Resources Committee Chair Frank H. Murkowski (R-Alaska) has written a letter to Treasury Secretary Robert E. Rubin regarding regulation changes the Internal Revenue Service is considering, which would allow publicly owned utilities to expand use of tax-exempt bonds to compete against privately owned utilities.

Murkowski asked the IRS not to issue new regulations giving publicly owned utilities a "special competitive advantage" by allowing the companies to issue tax-exempt bonds.