Marketing & Competing

"This legislation represents a piecemeal approach to a problem which requires deliberate and thoughtful consideration .... [It] could lead to 'cream-skimming,' which would result in increased rates for the remaining business and residential customers" (Lincoln Almond, Governor of Rhode Island).

Words to this effect are likely to grace vetoes of retail wheeling legislation by governors and maybe the President of the United States for the foreseeable future.

Perspective

A century ago, Congress conveyed valuable public property to certain entrepreneurs to serve the public interest. In exchange, these entrepreneurs agreed to carry the nation's principal means of communication at fair cost and, of course, serve the national defense.

In 1850, with a commitment to move the mail at fixed rates and freely transport federal troops hither and yon, a swath of public land was granted to the Illinois Central to connect Chicago with Mobile.

Top 14 R&D Players Named in Report

TECC Group, Inc. has identified 14 U.S. investor-owned electric utilities (IOUs) as major players in research and development (R&D), with expenditures in excess of $10 million. TECC's report, U.S. Electric IOU Research, Development & Demonstration Expense Comparisons 1994, places Southern California Edison at the top of the list ($64 million) and PECO Energy Co. 14th ($11 million). In between, in descending order, we find: Consolidated Edison Co.

New Gas Storage Service Lets Customers Hedge

Southern California Gas Co. (SoCalGas) has unveiled a "transaction-based" storage program that allows customers to arrange one storage transaction at a time and to negotiate storage fees.The program was approved by the California Public Utilities Commission in November. Previously, most storage customers had to choose between basic, long-term, or auction services, which required differing storage commitments that ranged from a few months to 15 years.

"Quicktrade," Up and Running

Quicktrade, an electronic natural gas trading system created by Enerchange L.L.C. and Energy Exchange Inc., went on line January 8, serving multiple points in the Chicago area and Ventura, IA, as well as pooling points along Natural Gas Pipeline Co.'s interstate system. The computerized, real-time system allows buyers and sellers to trade gas 24 hours a day both in the United States and in Canada (through the Energy Exchange). Quicktrade enables users to instantly measure levels of supply and demand, determine price trends, and execute transactions.

New Gas Challenges Ahead

A joint study by Arthur Andersen & Co. and Cambridge Energy Research Associates (CERA) cites this winter's dramatic spike in natural gas prices as evidence of a growing need for selective new investment in gas transmission and storage infrastructure. Natural Gas Trends, 1996 identifies three underlying trends:

s Surging demand is creating new bottlenecks.

s Technology is improving the competitive position of gas.

s Natural gas and electric power markets are becoming increasingly integrated.

Enron Salvages India Plant

Canceled last August, Enron Corp.'s $2-billion, 2,250-megawatt power plant in Maharashtra has been resurrected. Enron's new agreement with the Indian Government specifies a lower price for electricity (5.28 instead of 6.81 cents per kilowatt-hour) and a $365-million cut in capital costs. A separate venture will cover a portion of the costs in the project's second phase, reducing the overall capital budget from $2.8 to $2 billion. Although the government has not yet rendered a formal decision, Enron expects to begin construction within three months.


12

El Paso Electric Rises From the Ashes

After four years and four tries, El Paso Electric Co. (EPE) has finally got a plan, and a ticket out of bankruptcy. EPE's fourth amended reorganization plan has been approved by the federal bankruptcy court as well as federal and state regulators, and received near-unanimous acceptance by creditors and stockholders.

The plan proposes two alternative methods of emerging from bankruptcy. Under the preferred alternative, EPE would use the proceeds from an underwritten public offering of first mortgage bonds to repay the claims of existing secured creditors in full.

Joules

.Pp

jü( )l, n: A unit of energy measurement equal to a watt-second. .Pp

Three company alliances offer utilities new tools to help customers use and save on energy:

s AT&T and Andersen Consulting have developed a prototype communications system that allows utilities to offer home security, electronic billing, real-time pricing, and other energy management services.

s A new company formed by Ameritech Corp. and Wisconsin Energy Corp.

Trends

Over the past quarter-century, the electric utility industry has undergone oil embargoes, economic recessions, increasing regulatory complexity, and great advances in technology. Perhaps the two best adjectives to describe the last 25 years are "uncertainty" and "change." With deregulation and restructuring upon us, the pace of this change and uncertainty is accelerating. But one thing remains constant: When it comes to presidential elections, growth in electric demand is a good indicator of an incumbent's chances for reelection.