Financial models within the utility industry are changing rapidly. Driven by competition, deregulation, and shareholder concern ov er profitability, North America's intermediate and larger-sized electric and gas companies are looking more closely at information technology (IT) investments.

Electric utilities are informationally dysfunctional. When we surveyed electric utility managers from around the country, we found a general consensus: Individual employees may possess vital information, but typically they do not know what to do with it. They don't understand why it's important or who may need it.

The Idaho Public Utilities Commission (PUC) has decided to continue its five-year-old revenue sharing plan for U S WEST Communications, a local exchange telephone carrier, for one year. It initiated a workshop to develop a new regulatory plan for the carrier, and also proposed specific quality-of-service standards and penalties due to a recent decline in service quality.

While lowering current rates for electric gas and water services provided by Wisconsin Power & Light Co., the Wisconsin Public Service Commission (PSC) has also approved a series of gas and electric incentive mechanisms for the utility.

The ratemaking modifications include a natural gas procurement incentive that works through the company's adjustment clause and includes a link to spot commodity prices for gas supply as well as a sharing mechanism to allocate the risk of cost changes between ratepayers and shareholders.

The New York Public Service Commission (PSC) has approved comprehensive rate and service tariffs enabling AT&T Communications of New York, Inc. (AT&T) and Frontier Communications of Rochester, Inc. (Frontier) to provide local telephone services in the Rochester, NY, service area. The PSC expects to approve a third set of tariffs for Time Warner AxS of Rochester, L.P. early this year. The new tariffs will allow telephone customers in the Rochester area to choose between the three new market entrants and the existing local carrier, Rochester Telephone Corp.

The California Public Utilities Commission (CPUC) plans to issue interim rules in June 1995 allowing competitors to seek authority to offer local telephone service in the state. (The CPUC also recently completed a plan to open the "local toll" market to competition.) The CPUC directed all interested parties to seek a settlement of the issues arising under its plan to move the local market to full competition by 1997.

The Massachusetts Supreme Court has vacated and remanded a Massachusetts Department of Public Utilities (DPU) decision on environmental externalities, agreeing with Massachusetts Electric Co. that the DPU had no authority to require electric utilities to select new power sources based on externality values that encompass costs ratepayers otherwise would not incur.

A recent rate order by the Pennsylvania Public Utilities Commission (PUC) granting West Penn Power Co. a $53.7-million increase has generated some disagreement between the state's utility commissioners on the issue of rate of return on equity (ROE). Although the PUC reduced the utility's proposed ROE from 12.5 to 11.5 percent, PUC chairman David W. Rolka and vice chairman Joseph Rhodes, Jr. both claimed the ROE was too high.

The California Public Utilities Commission (CPUC) has approved increases in the rate of return on equity (ROE) for the state's largest energy utilities, citing increasing interest rates and perceptions of risks in the electric industry. The CPUC approved increases of 70 to 120 basis points above the 1994 baseline ROE figure of 11 percent.

It explained that since utilities' ROEs were reduced as interest rates dropped, they should increase with the general cost of capital.

You can look at the title in two ways: (a) "The sky is falling," or (b) "There's nothing new under the sun." But both views are wrong. Let me explain.

No one doubts that state public utility commissions (PUCs) must change. But we need not throw up our hands in despair or smile and pretend we've seen it all before. Yes, PUCs have seen major changes before. The 1930s expanded PUC authority from an advisory, sunshine role to serious oversight.