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AFTER A FOUR-YEAR DEBATE ON ELECTRICITY REFORM, CALIfornia's powerful industry players have carved out a unique and broad new role for "scheduling coordinators." SCs have the central role in offering fully unbundled generation, transmission and retail-access services. But could these SCs, by controlling the market, also become the new monopolists?

California's highly complex scheme for markets, while said to be laissez faire, maintains several artificial constraints and market protocols that create advantages for SCs.

WE HAVE SEEN THE FUTURE AND IT IS THE HOURLY pricing of electricity.

In California, the power exchange serves as the cornerstone for a restructured electric industry. The raison d'être of the PX is to reveal the hourly marginal cost of electricity. Now add PJM to the list. Like California, an integral aspect of the restructured Pennsylvania-New Jersey-Maryland Interconnection, as approved by the Federal Energy Regulatory Commission by order dated Nov. 25, 1997, is the mid-Atlantic market, which intends also to fix an hourly price for electricity.

Go figure. Plans to shut down nuclear generation in Ontario should not affect electricity supplies this winter within the United States, despite early rumors of chaos and rising natural gas prices. However, an unexpected slowdown in coal delivery by some U.S. railroads has "seriously reduced" on-site stockpiles of coal at some generating plants in three regional reliability councils - ERCOT, SERC and SPP - particularly those dependent on coal from the Powder River Basin in Wyoming.

MAINE YANKEE PRUDENCE. The Maine Public Utilities

Commission will investigate the prudence of Maine Yankee Atomic Power Co.'s decision to close its nuclear plant permanently.

The PUC said Oct. 22 that unrecovered investment in Maine Yankee combined with the loss in plant value could cause additional stranded assets for plant owners Central Maine Power Co., Bangor Hydro-Electric Co., and Maine Public Service Co. If imprudent action is found, the PUC said it would take steps to ensure that Maine's electric ratepayers do not bear any related costs.

WHETHER YOU CALL IT "DEREGULATION" OR "re-regulation," the promised move to competition does not mean less regulation - at least not any time soon.

WHEN THE CALIFORNIA PUBLIC UTILITIES COMMISSION approved a price-cap plan for Southern California Edison's distribution operations, it lamented the lack of a "distribution-only" study on productivity. So we prepared one.

Unlike electricity generation, electricity distribution will remain a regulated business. But the form of regulation likely will change to price caps, mirroring events in telecommunications regulation here and energy regulation abroad.

With price caps, rates are reviewed formally only at set intervals.

WITH DIRECT ACCESS SCHEDULED TO BEGIN ON Jan. 1, 1998, California regulators are moving quickly to set up their long-considered policies on electric restructuring. The restructuring actions touch nearly every aspect of electric regulation in the state from financing decisions and rate design to the sale of generating assets and monitoring new capital additions.

In addition, restructuring has affected ongoing regulatory activities such as the development of performance-based rate making plans and pricing and rate designs for large incumbent utilities.

USE OF U.S. ECONOMY UPHELD FOR EQUITY CALCULATIONS

The Federal Energy Regulatory Commission, in seven rate cases involving interstate natural gas pipelines, has upheld a new policy on the appropriate long-term growth rate to be used in computing their return on equity. Five of the pipelines contested FERC's new policy, as announced in Opinion 396-b.

The Commission defended the rate-setting method, but decided to allow the pipelines a chance to prove why the rules should not apply to them. The contesting pipelines are: Trailblazer Pipeline Co. (Docket No.

PITTSBURGH CHALLENGES MERGER; ALLEGES COLLUSION

The city of Pittsburgh has filed an antitrust lawsuit against Allegheny Power Systems Inc., and Duquesne Light Co., to stop the merger proposed by the two companies.

In its Sept. 29 court filing, Pittsburgh claimed the two utilities acted jointly to restrain trade. The city said the companies did this by agreeing to maintain higher rates for electric retail service at two industrial sites targeted for redevelopment zones pending their merger.

AS U.S. ELECTRICITY MARKETS BECOME increasingly competitive, large industrial customers will discover many new choices. These choices include the opportunity to modify the amount and timing of electricity use in response to prices that vary from hour to hour. In addition, customers can sell certain electricity services, including operating reserves and load following, to the system operator. And industrial customers with cogeneration facilities can participate fully in bulk power markets, buying and selling energy and ancillary services in response to changes in spot prices.