High industrial electricity rates are often blamed upon current regulation. Some state regulators respond with broad-based reforms; others simply reallocate system costs from industrial rate classes to rates for more inelastic customers (em namely, residential users.
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.
Standard & Poor's (S&P) has released a survey of 90 state regulators and their opinions on electric utility deregulation, conducted by RKS Research and Consulting. S&P intends to use the survey to assess the "nonquantifiable risks and opportunities" of competition.
The study found that state regulators and staff do not fully support stranded-cost recovery through cost allocation at the state level. Regulators would prefer to share stranded costs among large customers, small commercial and residential customers, and shareholders.
Investigations of changes in the structure of the electric utility industry are growing at the state level.
In a little over a year, the electric utility industry has seen six significant mergers.1 This trend toward consolidation most likely will increase as the industry becomes more competitive.
The Idaho Public Utilities Commission (PUC) has approved the merger of Washington Water Power Co. with Sierra Pacific Power Co. and its corporate parent, Sierra Pacific Resources. Pursuant to the terms of the merger agreement, the surviving entity will become Resources West Energy Corp., a Nevada corporation authorized to conduct business in Nevada, Washington, Oregon, California, and Idaho.The utilities estimate that the merger will save ratepayers $514 million over a 10-year period, with nearly half the savings attributable to reductions and alterations in workforce.
In electric power, telecommunications, water, and natural gas, the costs of local distribution make up a significant share of the cost of providing services. For any network or system, the cost of distribution facilities is largely or entirely independent on usage; i.e., such costs are largely invariant to the number of phone calls, kilowatts, British thermal units (BTUs), or gallons that customers use.
intangible benefits gained by the unregulated subsidiaries. The case involved complaints regarding merchandise and appliance services provided by Baltimore Gas and Electric Co. (BG&E).
The Maine Public Utilities Commission (PUC) has decided to investigate the need for changes in existing regulations for water rates as a result of "drastically increased" water treatment, filtration, and supply costs. While rejecting calls for immediate changes in rate design, a shift to volumetric interclass cost allocation, and special low-income rate schedules, the PUC decided to open two separate inquiries to determine whether formal rulemakings were required.
If anyone ever asks about what you read in this column, tell them you heard it somewhere else.
Of course, I don't really mean that. Let me put it another way: The FORTNIGHTLY gets invited here and there with the understanding that some things will end up in print, and others not. And while I never quote anyone if they were holding a fork or a glass, I do my best to bring back the inside story.