PG&E

The Federal Energy Regulatory Commission (FERC) set in motion a new round of restructuring for the U.S. electric power industry when it issued its latest Notice of Proposed Rulemaking (NOPR).

Everybody's talking about electric utilities dabbling in telecommunications. That's fine. But how about vice versa? Maybe what we've really got is telephone companies (and cable television, too) getting into energy. That's different.

According to the Natural Gas Vehicle Coalition (em a national organization of local natural gas distributors, pipelines, and equipment manufacturers promoting natural gas vehicles (NGVs) (em the U.S. government supports our country's continued reliance on petroleum-based fuels for transportation through billions in subsidies and tax incentives.

There is a price to pay for becoming a lean, mean fighting machine, and utilities paid the price in 1994.

A number of electric utilities saw revenues increase last year on the strength of higher sales, but the costs associated with laying off hundreds of employees and downsizing company operations took a significant bite out of earnings.

A PUBLIC UTILITIES FORTNIGHTLY survey of the nation's top 20 electric utilities shows an increase in their combined 1994 revenues to $107 billion, a healthy 3.6-percent rise over the previous year.

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.

There is a price to pay for becoming a lean, mean fighting machine, and utilities paid the price in 1994.

A number of electric utilities saw revenues increase last year on the strength of higher sales, but the costs associated with laying off hundreds of employees and downsizing company operations took a significant bite out of earnings.

A PUBLIC UTILITIES FORTNIGHTLY survey of the nation's top 20 electric utilities shows an increase in their combined 1994 revenues to $107 billion, a healthy 3.6-percent rise over the previous year.

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.

Citing credit uncertainties stemming from impending deregulation, Moody's Investors Service has posted negative ratings outlooks for the U.S. electric, telecommunications, and natural gas industries (with the exception of the pipeline segment). Moody's acknowledges, however, that the impact of deregulation will depend on market maturity, relative cost structure, degree of integration, and regulatory flexibility.

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Nuclear plant licensees could face an added level of state regulation just as they move to cut costs.Permanent disposal capacity for low-level radioactive waste (LLW) and spent nuclear fuel, long a top priority for the nuclear industry, has not yet become a reality. But the storage question draws more attention for its impact on nuclear power costs as electric generation grows more competitive.

Pacific Gas & Electric Co. (PG&E) is moving forward with a proposal to transfer jurisdiction over its mainline natural gas transmission facilities and storage system from the California Public Utilities Commission (CPUC) to the Federal Energy Regulatory Commission (FERC).

The natural gas pipelines at issue cross into the southwestern United States as well as Canada.