allow choice between price, reliability, and scheduling.
Customers with a choice are demanding, and getting, lower electric bills. These customers generally include municipals and large industrials. Municipals, as wholesalers, gained access to alternative suppliers via the Energy Policy Act of 1992.
The Ohio Public Utilities Commission (PUC) has issued a proposed framework for competition in the local exchange telephone market. In a separate opinion, PUC chairman Craig A. Glazer noted that new market entrants in the state appear to be dominated by Time Warner.
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.
When Niagara Mohawk Power Corp. announced its competitive restructuring plan on October 6, 1995, it broke ranks with what had been a curiously united front against competition. The opposition had learned to genuflect before the altar of competition, but then fight doggedly to keep markets closed. This united front had implied that competition would produce largely the same impact on all utilities, but that is not true. Competition offers lucrative long-term opportunities for some utilities and potential disaster for others.
In a recent article ("The Efficient Utility: Labor, Capital, and Profit," Sept. 1, 1995), Taylor and Thompson attempt to measure the
economic efficiencies of 19 investor-owned utilities.
The authors use a method of efficiency measurement proposed by M.J. Farrell in a pioneering paper published nearly 40 years ago.
In thinking about transmission pricing for a competitive electric industry, we should remember that the fundamental objective of competition is to increase economic efficiency. Improved economic efficiency, after all, leads to better use of resources, lower costs, and long-term benefits for consumers.
For the partners in a utility merger, the celebration must wait. After opening the most delicate of dialogues, and then negotiating the price and closing the deal, the merger partners must yet gain the approval of regulators. The application may lie sealed in its FedEx pouch, safely on its way to Washington.
Analysts may tout the coming "convergence" of communications technologies, but the real trend is "divergence."
No subject in recent memory has received as much media attention as the "Information Superhighway". But exactly what it is remains curiously unclear. The Internet? Wireless personal communications services (PCS)? Interactive fiber-optic cable to the home? The Infobahn is all of these and more.
Imagine if the airlines had followed a utility model when they deregulated back in 1978.You and five other planeloads show up at the airport to catch a flight to Chicago. Every few hours the airport operator holds an auction for the next hour's Chicago flights. Delta offers two new 767's at $200 per ticket. U.S. Air bids one 737 at $300. American has six
DC-9's and bids each one at $1,000 per head. When the auction ends, Delta and U.S. Air fill their planes.
Did you hear the one about the middle-aged utility executive who became depressed about plans to restructure his company? It seems he couldn't cope with how fast things were changing. So he threw himself in front of a glacier.
That story comes from a meeting I attended back in October, styled Executive Visioning Workshop, sponsored by Arthur D. Little, Inc., which attracted some 21 energy industry executives.