Long-distance telephone rates for U.S. businesses dropped 7.9 percent from February 1995 to February 1996, according to the International Telecommunications Price Survey, released by National Utility Service, Inc. on April 16. At the same time, local calling rates decreased by only 1.5 percent.

The prospect of deregulation has induced a wave of mergers among electric utilities. Most of these mergers would fail an antitrust review because, by combining generation assets of interconnected utilities, they have substantially reduced potential competition in generation.

So the Federal Energy Regulatory Commission (FERC) won't break up the electric utility industry. But it may happen anyway (em if not at the FERC's direction, then perhaps under pressure from state regulators who, some say, are threatening to link stranded-cost recovery to vertical disaggregation.

What would a breakup mean for bonds and bondholders?

As we reported last month ("New Corporate Structures Place Bondholders at Risk," May 1, 1996, p.

Consumers

Labor Unions

ManagementDeregulation isn't just for utilities anymore.

This year, PUBLIC UTILITIES FORTNIGHTLY'S

annual Electric Executive's Forum recognizes

the growing constituency of the electric

utility industry.

s Cherry Picking

"If we ignore history, we're doomed to repeat it. And what happened in the natural gas industry is precisely what will happen. The FERC authorized deregulation of the natural gas industry and, as a consequence, today's retail consumers (em meaning residential retail consumers (em are paying more than twice as much for natural gas as the large industrial users.

Downsizing

"The short answer is 'yes'. . . . Utilities think they have to cut their costs in order to compete. The easiest way to cut costs is to downsize, get rid of people . . . which means they stop doing the work. And the result is a threat to the reliability of service.

s Merger Magic

"Occasionally, yes. There are obviously some fairly easily measurable synergies in some mergers. . . . The real issue, however,

is not whether there are savings. The real issue is could those savings have been obtained without concentrating the economic power that goes with a merger?

"Generally, we've dealt with it with judgment.

Oliver Richard is a gas man. His career includes a stint at the Federal Energy Regulatory Commission, as well as at Tenngasco, Northern Natural Gas Co., Enron, New Jersey Resources Corp., and The Columbia Gas System, Inc. Now he's found a new calling. He wants to be an ad man.

Several weeks ago I heard Richard describe his idea for the perfect 30-second TV spot to plug natural gas. Two utility CEOs are on the golf course. "Electricity costs too much," says one. "Some towns can't get gas service," says the other.

Michael Baly, American Gas Association president and CEO, will chair the National Energy Foundation. He replaces Richard Lawson, president of the National Mining Association. Arthur Wiese, Jr., public affairs v.p. of the American Petroleum Institute, was elected vice chair.

Attorney Karen A. Tomcala was promoted to the staff of James J. Hoecker at the Federal Energy Regulatory Commission. Previously, Tomcala practiced in the FERC's electric rates and corporate regulation section.