This country's 350,000 manufacturers must add cutting-edge technologies to their processes to stay competitive. Yet most are small- to medium-sized companies leery of investing in new technology without first
confirming its effect on their
products.Some utilities previously had no option but to run local technology-demonstration facilities on their own (see sidebar on p.
The electric utility industry is undergoing its most profound change since Thomas Edison and George Westinghouse battled over whether the American power system should be AC or DC. In essence, that technological choice shaped the industry we know today. Edison's low-voltage, DC system would have required many small generating stations and short distribution lines. The high-voltage Westinghouse AC system promoted development
of long-distance transmission networks that deliver electricity efficiently from large, remote power plants.
As electric utilities move ever closer to all-out competition, senior executives are streamlining their organizations, reducing spending, and developing strategic plans to ensure their company's future success. Organizations that cannot substantiate their contribution to the company's financial bottom line risk major budget cuts.
"Green pricing," at typical rates of customer participation, could expand demand for renewable energy beyond current levels by more than an order of magnitude, pushing down production costs for energy resources preferred by environmental advocates. And just as important, that expanded demand would occur outside of the regulatory framework (em matching capacity to customer needs and wants.In practice, the utility asks customers to pay rate premiums to fund the production or purchase of renewable resources.
Genuine competition - with greater efficiency and bona fide service improvements - is not unwelcome at most utilities. But spurious competition, with inconsistencies among players in the rules of the game, is a cause of frustration for utilities and customers alike.
Regulation in the natural gas industry is evolving rapidly. And on the electric side, the current flurry of activity is likely to draw on recent gas industry experience and move even faster.
The Massachusetts Department of Public Utilities (DPU) has completed a long-awaited rate plan for New England Telephone and Telegraph Co. (dba NYNEX), adopting price-cap regulation without earnings sharing, but with strong measures to protect ratepayers from monopoly pricing, investment risk, and subsidies of utility ventures. The plan also includes price floors and separates competitive and monopoly services for pricing purposes. The DPU also approved a rate freeze for basic residential service until 2001, but rejected a claim that rates should fall during that time.
The Georgia Public Service Commission has completed the first step required to implement the state's Telecommunications and Competition Development Act of 1995 (which mandates changes in telephone regulation) by issuing rules for local exchange carriers seeking to abandon traditional rate regulation in favor of alternative performance-based rate plans, including price caps. It issued separate filing requirements to obtain certificates for competitive local exchange service (also permitted under the new state law).
The U.S. Circuit Court of Appeals for the District of Columbia has upheld a Federal Energy Regulatory Commission policy allowing utilities to recover costs to switch from cash to accrualaccounting for post-retirement benefits other than pensions (PBOP) under SFAS 106.
The Massachusetts Supreme Court has overturned a decision by state regulators that would have allowed Commonwealth Electric Co.
The California Public Utilities Commission has issued a "positive" performance rating for the first year of a two-year, experimental performance-based rate program for San Diego Gas and Electric Co.'s gas procurement and electric generation and dispatch activities. It extended the plan another year, to facilitate the second year's annual review, and said it expects the plan to stay in place "well into the third year" of the trial. Re San Diego Gas & Elec. Co., Decision 95-04-051, Applica. 92-10-017, Apr. 26, 1995 (Cal.P.U.C.).