Cost

FOR YEARS NOW ARGUMENTS ABOUT WHETHER RETAIL electric competition would benefit consumers and would serve the public interest have raged. Often saying there is little to be gained from competition and many dangers, powerful voices have urged opposition to competition or a glacial schedule for implementation of customers choice.

The Pennsylvania electric restructuring cases, however, should help end the arguments about the benefits of retail electric competition.

THE OLD ADAGE ABOUT INNOVATION STILL HOLDS TRUE: "You can tell the pioneers by the arrows in their backs." More than 70 municipal utilities have either built or plan to build telecommunications systems with fiber-optic and coaxial cable to compete against local cable television, data communications or telephony providers. Profitability for these ventures has been abysmal, but their customers and regulators are happy. Now large, investor-owned electric utilities are stumbling down the same trail marked with cast-off bandages of these early pioneers.

DURING THE WEEK OF June 22 there was a major imbalance between supply and demand for electricity in the Midwest. Although demand was high enough to set a few records, the real problem may have been the lack of supply. Many generators were out of service and a few marketers reneged on contracts to deliver power. Market prices for bulk power allegedly soared as high as $4,000 per megawatt-hour. The industry was left in an uproar over these volatile prices, especially since a competitive market has been touted as a means to achieve lower prices, not higher ones.

THE SUMMER OF 1996 OPENED COOLER THAN normal in June and July, cutting electric sales. When prices for natural gas did not fall as expected, as a counterbalance Consolidated Edison Co. of New York entered a combined gas-conversion and weather-heading transaction with power marketer Aquila Energy, giving Con Ed some measure of protection against further revenue shortfalls in August.

State PUCs

STRANDED COST RECOVERY. The Pennsylvania Public Utility Commission allowed Pennsylvania Power & Light Co. to recover $2.9 billion of a requested $4.5 billion in stranded costs, cutting a higher $4-billion allowance proposed earlier by an administrative law judge. The utility petitioned for reconsideration on June 26, after CEO William F. Hecht had called the decision "unacceptable," and noting that the PUC's written order, received June 15, appeared "even more injurious" to the company that the PUC's June 4 bench order.

ACCORDING TO ONE RECENT SURVEY, MORE THAN HALF THE U.S. population now lives in states with customer choice. Moreover, industry executives expect 20 to 50 percent of these customers to choose a new electricity supplier by year end. %n1%n

With changes expected in the way electricity is generated, delivered and sold, exerting pressure on prices, what does the future hold for energy storage technologies?

After all, restructuring efforts appear most active in the highest-cost states -- those with average electricity prices running above 7 cents per kilowatt-hour.

DEREGULATION PRESENTS WHAT IS PERHAPS THE BEST opportunity yet for renewables to stake a lasting claim in the electricity market.

Since most energy from renewable sources still isn't priced competitively with fossil-fueled technologies, many restructuring proposals at state and federal levels include various support mechanisms intended to drive down the renewable generation costs. The initial added expense is a necessary trade-off, advocates say, for the resulting reductions in emissions and energy price volatility.

DOES THE KYOTO CLIMATE CHANGE TREATY POSE A SEVERE threat to the U.S. economy or is that claim simply a "Chicken Little" prediction of detractors?

Pro-business Republicans, environmentalist bureaucrats and industry observers debated the merits of each position at the Ninth Annual Energy Efficiency Forum in Washington, D.C., on June 10.

One of the most vociferous opponents of the treaty was Rep. F. James Sensenbrenner Jr. (R-Wisc.), chairman of the House Committee on Science, who headed the Congressional delegation to Kyoto, Japan.

Other speakers included Ambassador Stuart E.

Power Pools & Reliability

SUMMER IN WISCONSIN. Responding to concerns about the electric shortages of the summer of 1997 and fears that they could happen again, Wisconsin PSC Commissioner Joseph P. Mettner has indicated that the state's energy supply outlook for the summer of 1998 appears much better in eastern Wisconsin than it did one year ago.

Mettner noted that Wisconsin's electric supply system is operating with expected reserve margins of 19.2 percent. But he cautioned that electric power flows do not respect borders.

TELEPHONE BILLING PRACTICES. Citing the filed-rate doctrine, which bars deviation from published tariffs, a federal appeals court affirmed the dismissal of two class action suits against AT&T Corp. that sought damages for alleged fraud. The suite arose from AT&T's failure to disclose to its residential long-distance telecommunications customers its practice of rounding charges up to the higher full minute.