Electric restructuring weighs heavy on the mind these days. Drastic remedies are born more of hope than vision. Look at the April 20, 1994, proposal from the California Public Utilities Commission (CPUC) for mandated retail wheeling (the Electric Restructuring Order, often referred to as the "Blue Book").1
The Blue Book became a catalyst for national debate. But the Blue Book did not create the problem; it only reacted.
During the last decade, the natural gas industry in the United States has been transformed from a heavily regulated business to one facing competitive markets. This transformation grew out of the failure of regulation; regulators, suppliers, pipelines, and customers all played a part. It continues today as the industry restructures and builds new institutions.A series of regulatory crises forced deregulation in stages: First, wellhead prices; second, gas contracts; and finally, pipeline transportation.
Who will pay the costs incurred by regulated utility companies as they shift to competitive markets under plans engineered at the federal and state levels? This question is part of the debate over electric industry restructuring, but any payments lie in the future. For ratepayers in the gas market, however, the time has come. So far, state regulators have interpreted the law as prohibiting any sharing of gas market "transition" costs between shareholders and ratepayers.
The Federal Energy Regulatory Commission (FERC) has refused to reconsider its December 14, 1994, policy statement on hydroelectric plant decommissioning. That policy upholds the FERC's authority to deny new project licenses when existing licenses expire and to order owners to remove a dam during the relicensing process (Docket Nos. RM93-23-000, RM93-23-001). Commissioner James J.
Six major independent power marketers, calling themselves the Coalition for a Competitive Electric Market, have asked the Federal Energy Regulatory Commission (FERC) to begin broad-based, competitive reforms of the nation's electric service industry by winter 1996-97. Ultimately, they want the FERC to force all electric utilities that own transmission wires to allow marketers and other transmission-dependent power sellers and buyers to use their lines on a comparable basis.
The Federal Energy Regulatory Commission (FERC) has asked for comments on alternatives to traditional cost-of-service pricing for interstate natural gas pipeline transportation rates (Docket No. RM95-6-000). In response to many requests from pipeline companies to approve rates based on other pricing methods, some cost-based and some not, the FERC wants to develop a framework for analyzing alternative proposals.
Louisville Gas and Electric Co. (LG&E) has filed a settlement offer on comparability of electric transmission, the result of negotiations with Federal Energy Regulatory Commission (FERC) staff since November. The first of its kind filed at the FERC, the settlement forms part of LG&E's comparable transmission service case, which involves the utility's network and point-to-point tariffs.
We stand on the threshold of a new era in the electric services industry. I deliberately avoid the term "electric utility industry," because the future is not limited to the vertically integrated monopoly utility. Many utilities may already perceive the first cracks in their armor: nonutility generators (NUGs), self-generators, and energy service companies.
Competition is not in the industry's future; it is here now. Further, competition and market forces are not going to magically disappear.
The Federal Energy Regulatory Commission (FERC) has accepted a settlement agreement between Massachusetts Electric Co. (ME), the Massachusetts Bay Transportation Authority (MBTA), and Boston Edison Co., which decides stranded investment and wheeling issues arising from ME's loss of MBTA as a retail customer (Docket No. ER94-129-000). The case arose in 1991, when the Massachusetts legislature designated MBTA a "domestic electric utility," allowing MBTA to leave ME. MBTA then signed a wholesale supply agreement with Boston Edison.
The Ninth permits everything that is not prohibited. The Tenth prohibits everything not otherwise permitted. The one governs the People; the other governs the Government. That's all there is. Now imagine standing on both feet behind a podium, in front of a luncheon crowd of about 100 think-tank types, and holding an audience spellbound for over an hour as you expound upon this noble topic.