Some shareholders do find bottom-line value

in a "marriage of convenience."

With six merger and acquisition (M&A) deals announced between May 1995 and January 1996, and three more so far this year, the long-predicted consolidation of the electric utility industry is taking hold. At least 23 utilities, with business-combination transactions pending, are part of the frenetic domestic M&A activity that has swept the industry.

Marriage of convenience eyes retail market.

By Richard S. Green and J. Michael Parish

Enron's proposed entry into the electric energy business is a "wake-up call." Open competition will continue to accelerate, and new, aggressive players will seek ways to become involved as the energy and energy services businesses converge.

A combined Enron/Portland General Corp.

Converging Markets:

The First REAL Electric/Gas MergerEnron's bid

to acquire Portland General heralds a new phase

in utility competition.

Why the Holding Company Act doesn't matter.

By Charles M. Studness

The merger agreement between Enron and Portland General Corp. has reshuffled the electric restructuring deck. It makes electric utilities takeover targets for outside suitors after 60 years of peaceful immunity.

asset value and return on capital, not lost revenues.

On July 3, the Pennsylvania Public Utility Commission (PUC) submitted its report to the Governor and General Assembly on retail electric competition (PUC Docket No.

I-940032).

The North Dakota Public Service Commission (PSC) has approved the Primergy merger between Northern States Power Co. and Wisconsin Energy Corp.

As an important factor in its decision, the commission noted that after the merger, Primergy plans to reduce North Dakota electric rates by 1.5 percent and gas rates by 1.25 percent, with a moratorium on increases until 2001.

Two recent decisions from Hawaii and Michigan illustrate some of the issues now arising on the question of resale of telephone service by local exchange carriers (LECs).

In Michigan, the state public service commission has directed the state's LECs to offer all basic local exchange services for resale in a nondiscriminatory manner to competitors and affiliates at wholesale rates. It defined "wholesale rates" as retail rates less the avoided costs to the LEC.

The North Carolina Utilities Commission (NCUC) has rejected a request by Duke Power Co. to recover as a cost of fuel some 90 percent of the price of bulk power purchased from Enron Power Marketing, Inc.

Instead, it allowed Duke to recover only 59 percent Enron purchases, the level of fuel costs Enron could verify by directly contacting the generating utilities. Nevertheless, it said it would not accept "hearsay" evidence on the share of costs attributable to fuel.

A recent ruling by the New Jersey Board of Public Utilities (BPU) has directed Public Service Electric and Gas Co., to show that customers will be better off under the company's newly proposed program for alternative regulation (the "New Jersey Partners in Power Plan"), than under traditional regulation.

Nevertheless, the BPU declined to set a rate base or rate of return to establish a starting point for rates under the new proposed plan.

In a case involving San Diego Gas & Electric Co. (SDG&E), the California Public Utilities Commission (CPUC) has OK'd new guidelines for preapproved contracts designed to obtain, attract, or retain new electric customers. The guidelines also apply to contracts designed to stem self-generation or avoid customer flight out of state.

The CPUC also will allow SDG&E to negotiate a rate discount contract with any customer, for any purpose, as long as shareholders absorb 100 percent of revenue losses and rates reflect a price floor based on customer-specific marginal cost.

The North Carolina Utilities Commission (NCUC) has upheld an earlier ruling (issued May 2) that required interexchange carriers (IXCs), on a dollar-for-dollar basis, to reduce rates for basic intrastate message telephone service (MTS) so as to flow through to MTS customers certain reductions in local telephone access charges.

It denied requests by the IXCs to share the rate reductions with all switched-access customers, rather than target the rate cuts to basic toll services only.