Transmission

Technology's Strategic Role

The electric utility industry is undergoing its most profound change since Thomas Edison and George Westinghouse battled over whether the American power system should be AC or DC. In essence, that technological choice shaped the industry we know today. Edison's low-voltage, DC system would have required many small generating stations and short distribution lines. The high-voltage Westinghouse AC system promoted development

of long-distance transmission networks that deliver electricity efficiently from large, remote power plants.

FERC Wants Rolled-in Pricing for Systemwide Benefits

The Federal Energy Regulatory Commission (FERC) has issued a policy statement requiring

rolled-in pricing for new pipeline facilities where the benefits to the system are proportionate to the rate impact on existing customers (Docket No. PL94-4-000). In the past, the FERC made cost-recovery pricing decisions during the first rate case after the facilities were constructed. Now, the FERC will make its determination when the certificate is issued.

WRTA First to get FERC Final Approval

The Federal Energy Regulatory Commission (FERC) has granted final approval to the Western Regional Transmission Association (WRTA), making it the first regional transmission group (RTG) approved under the FERC's 1993 policy statement (Docket Nos. ER94-1288-003 and

ER94-1288-004).

WRTA had received conditional approval last October, but members were directed to provide comparable electric transmission service and file a single, regional transmission plan.

People

Philip R. Sharp, former 10-term congressman from Indiana, has been named director of the Institute of Politics at Harvard University's John F. Kennedy School of Government. Sharp assumes the position on July 1, succeeding Charles Royer, former mayor of Seattle, WA.

NICOR Inc. has elected Thomas L. Fisher, currently president and COO, to the additional position of CEO. Fisher will continue as president and CEO of Northern Illinois Gas Co., the company's largest subsidiary.

Charles W.

Electricity Transmission and Emerging Competition

Interesting times. Challenging times. Confusing times. The electricity industry and its regulators are now inextricably meshed in a tangle of interconnected reforms. With 50 states as laboratories, the process is accelerating. There is no going back. But which way is forward?

The old model of a closed system of vertically integrated electric utilities offering bundled service has been discarded in theory, and is being dismantled in practice.

The Mega-NOPR

The Federal Energy Regulatory Commission (FERC) Mega-NOPR1 covers four topics:

1) The FERC's jurisdictional powers to implement wholesale open access

2) The FERC's proposal for electric utilities to recover "legitimate and verifiable stranded costs" from departing wholesale customers (a small fraction of all stranded investment), and its belief that states should ensure recovery on retail bypass (the much larger share)

3) A range of measures to implement

Columbia Gas FIles Bankruptcy Plans

The Columbia Gas System, Inc., and its principal pipeline subsidiary, Columbia Gas Transmission Corp. (CGT) have filed separate reorganization plans with the U.S. Bankruptcy Court for the District of Delaware.

The parent company's plan proposes total distributions of about $3.6 billion to creditors, including $2.3 billion to pay prepetition debt, with $1.1 billion in interest.

Will IOUs Unbundle by 2000

Forty percent of 42 state public utility commissions (PUCs) expect electric utilities to unbundle generation from transmission and distribution within the next one to five years, according to a survey conducted for the Electric Generation Association (EGA) by Boston Pacific Co.

Let's End the Monopoly

My subject today is regulation and competition in the electric utility industry.

You all know only too well what's happened to this industry in the last decade or so: Inflation accelerated, interest rates rose, productivity growth slowed, fuel prices rose dramatically, growth in demand stopped, and the cost of meeting environmental and safety regulations soared. For utilities that was truly a devil's brew.