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Fortnightly Magazine - July 15 1995

Anderson as predicting that if the FERC rejects the idea that a meter is enough to make a city a utility, then Falls Church will invest in some "transformers and line drops" and submit a new application on municipalization. At some point in the process, the FERC will have to acquiesce.

Of course, the FERC wants to mark a bright line between transmission and distribution to accommodate its proposed policy on stranded investment cost recovery. In fact, its recent notice of proposed rulemaking asserts exclusive jurisdiction over all those utility facilities used to deliver electric energy in interstate commerce to a wholesale purchaser,

regardless of whether one refers to such plant as transmission or distribution. But that bright line (em drawn broadly to expand federal jurisdiction (em is seen in the C&L study as favoring municipalizations. The study cites Allen as saying that the FERC's view will give Falls Church "'more space' to pursue a 'muni lite' approach."

Moving Expenses

The seventies were marked by the great "rust belt" migration, when steelworkers from the Northeast and Midwest moved South and West, looking for jobs. Will electric rates play a role in future relocations?

In their recent study, Free Markets Emerge in the Electric Power Industry, published by Primary Research, New York, NY (212-397-5055), James Moses and Joseph R. Flicek argue that state-by-state population trends already show some correlation with electric rates. Moses and Flicek claim that, with the notable exception of California, the states with the lowest electricity cost have witnessed the higher rates of population growth, as measured between 1993 and 1994 (see box).

Moses and Flicek might be stretching things a bit. Several other states besides California seem to fight the trend: Iowa (low rates, low growth), West Virginia (low rates, low growth), Arizona (high rates, high growth). Nevertheless, it's worth remembering that electric utility restructuring is regional or even state-specific in nature. Views differ extensively from region to region, as you can see from some of the quotes the authors dug up from sources at various state utility commissions:

Hawaii. "Utilities are not really downsizing."

Kansas. "There are no special deals due to competition at this time."

Missouri. "We are at ringside . . . . We are not pro or con."

North Dakota. "It [unbundling or deregulation] is really not needed."

The Moses/Flicek report analyzes rates, regulatory trends, and utility strategies for each state and the 10 Canadian provinces. The study even lists the names and telephone numbers of consumer and industrial electric-rate lobbying organizations that are active in each state.

So you can call them before they call you.



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