Divide the grid by usage (em local vs. regional. Apportion costs accordingly, to energy customers by fixed charge, and power producers by flow and distance.

Traditionally, utilities have received transmission costs through an average, rolled-in access fee, or postage-stamp approach. In a deregulated environment, that approach will lead to distorted pricing.

And not just because of transmission-line congestion.

Much of the current debate over electric transmission pricing has centered on the various competing methods of congestion pricing, such as zonal vs.

Locational marginal pricing, even if "complex," is well worth the benefits.

In two recent issues, PUBLIC UTILITIES FORTNIGHTLY featured editorials %n1%n on restructuring of the PJM Pool. Those two articles described proposals by the so-called supporting companies, %n2%n seven members of the Pennsylvania-New Jersey-Maryland Interconnection, to use a "locational marginal pricing" model for congestion pricing for electric transmission and to continue PJM as a "tight" power pool.

All three may apply, especially if regulators go wrong and let ISOs make the business decisions.

Electricity transmission is a real business. With more than $50 billion of net plant, another $3 billion annually in capital expenditures and yearly operating income that could reach $5 billion per year under normal circumstances, the power grid is roughly twice the size of the natural gas pipeline industry. One would never know that from current events, however. Utility management treats transmission as an inconvenient stepchild.

Competition abounds at wholesale, but retail is another story.

Will geography, politics and regional economics stand in the way of real choice for electric consumers at the retail level? Consider this tale of two power players.

One competitor, the Indiana Municipal Power Agency, is proud of itself. In its annual report, IMPA says that open access and competition in the wholesale market allowed it to trim wholesale rates for power it delivered to member distribution companies in 1996. "The results were remarkable," the report reads.

As marketers discover, some LDCs keep a strong grip on the residential class.

Michael Meath of Agway Energy Products has a dream. A dream to tap the 4.5 million natural gas customers in New York State, supplying commodity and then, other services.

New York state unbundled gas rates in March 1996, with new tariffs approved later that year. Since then, just 11,000 customers out of 4.5 million (em less than half a percent (em have decided to use aggregated transportation service.

Not all New York utilities have filed customer aggregation programs, however.

Follow the arrows as California's direct access workshops map out who will have access to electric customer data.

In its latest order implementing direct access for electric customers, the California Public Utilities Commission told Pacific Gas & Electric, Southern California Edison, and San Diego Gas & Electric to conduct workshops to recommend rules on the release of customer information in a deregulated electric industry.

The PUC offered guidelines.

The Idaho Public Utilities Commission has rejected a request by Intermountain Gas Co. to cut demand-side management and conservation requirements from its integrated resource planning guidelines, despite company claims that reforms were needed to align the planning process with current business practices.

Meanwhile, the Florida Public Service Commission has authorized Florida Power and Light Co. to terminate an existing research and development program for a new gas-driven technology.

Idaho.

Responding to directives from its Legislature, the Maine Public Utilities Commission has directed local-exchange telephone carriers to lower their per-minute, common-line charge by 20 percent, but without changing the access charge rate structure.

At the same time, it rejected a proposal by New England Telephone and Telegraph Co. to adjust the local carrier's recently approved price-cap plan to reflect a predicted erosion in revenues. The PUC found no evidence that a cut in access rates would depress local carrier revenues.

The New York Public Service Commission has authorized Niagara Mohawk Power Corp., to set up an emissions reduction credit pool to assist economic development efforts in the state.

It also approved the utility's plan to fund the pool with more than $700,000 of existing deferred credits owed to ratepayers from previous sales of sulfur-dioxide allowances.

The company plans to sell the credits at market value and as part of special discount electric service tariff offerings.

Unexpected price increases for natural gas during the past winter heating season have stimulated action by state regulators across the country. Most recently, North Carolina and New Mexico have approved changes in adjustment clause and billing rules to temper the effect on consumers.

North Carolina. The North Carolina Utilities Commission opened a generic proceeding to consider shortening the notice period required for changes to benchmark natural gas commodity rates by local distribution companies.