Deregulation

I know what you are thinking. We're in an age of deregulation, so the role of the state public utility commission is diminishing. You feel you can cut back on your regulatory affairs staff and concentrate on your business - on your marketing plan. Well, think again.

"Deregulation" doesn't quite describe what's happening today in energy and telecommunications. In reality, we are restructuring, not deregulating. And restructuring will raise a number of difficult issues that, like it or not, must survive review by your friendly state regulator.

Electric utility stocks bottomed out in 1999. It's up to managers to lead a rally.

The allure of technology stocks and rising interest rates combined to make 1999 the worst year for electric utility stocks since 1974, according to market analysts. But they see upside potential in the under-performance of these stocks, and say utility managers can play a role in attracting investors.

California has a plan to track green electricity, but can it be trusted?

All electricity is the same, but the California Energy Commission wants to change that. It plans a system to authenticate the source of electricity to allow consumers to buy power from specific generators. Standard documents called "Certificates of Specific Generation" would certify financial transactions. Presumably, the plan would help document the authenticity of non-generic electricity products, such as green power.

Deregulation in the E.U. is racing ahead, posing a challenge for U.S. firms. Yet the outcome is uncertain, as EdF, the giant of Europe, has yet to show its hand.

Eighty percent of the European power market will be open to retail competition, or liberalized, by 2003. The fundamental framework for shifting to a competitive market in Europe has some striking differences to the transition in the United States. Some primary contrasts with the U.S.

With encryption of name and address - but disclosure of usage and billing - customers can have their cake and eat it too.

How to assure consumer privacy in energy deregulation has utilities, energy marketers and regulators in a dither.

With a deregulating market, utilities must share their consumer data with energy marketers in their territories. The more information energy marketers have about consumers, the better the products, prices and payment plans they can offer. This information, however, may include sensitive details about a consumer's finances and habits.

The green power mind-set is locked in the wholesale world, clueless about what it takes to perfect real consumer products.

With so much at stake, why don't utilities ask vendors for plug and play?

Everyone agrees that competitive retail energy markets need interoperable information systems. Otherwise, the high cost of switching proprietary metering and data communications systems could offset savings from customer choice. Standardization reduces the costs of automating operations - also crucial for competitive companies. Interoperable "plug and play" systems can free companies of dependence on expensive, single-sourced equipment. So why do most utility systems remain incompatible from vendor to vendor?

Investors look at environmental ratings for link to stock performance.

While socially responsible investors have been interested in environmental performance for some time, mainstream utilities investors are looking at the issue for a different reason - environmental leaders consistently achieve better financial and stock market performance than their less eco-efficient competitors.

The numbers say "yes," adding weight to last year's benchmarking survey.

Does productive efficiency help determine an electric utility's prospects in regulated or competitive markets? Is productive efficiency a better marker of real-world success than simple financial attributes, such as cash flow, dividend ratio or operating income?

In unregulated markets, higher productivity translates directly into relative declines in costs and prices, and by extension, greater ability to compete and prosper.

Studies and Reports

Natural Gas Retail Choice. Utility affiliates hold large market shares in natural gas customer choice programs, raising questions about the extent of true competition, according to a study released on Dec. 15 by the U.S. General Accounting Office. Participation varies by region, however, according to the report, "Energy Deregulation - Status of Natural Gas Customer Choice Programs."

In Pennsylvania, for example, three out of four programs showed very high shares for utility affiliates. The Equitable Gas Co.