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PUCs at 2000 - Question OneState Commissioners

Fortnightly Magazine - November 15 1995

In an atmosphere of competition with its inevitable emphasis on the "bottom line" it would be irrational to conclude that safety and reliability are assured.

Assuming that we maintain the confidence of a population that will probably approach 40 million Californians, the CPUC will be tasked to reinvent itself so as to be of service in its third century. My ability to foretell the future will doubtless have been unmasked as flawed if not nonexistent, but my successors will retain significant responsibilities. [End of Fessler response]

Response by Hugh A. Wells, Chairman, North Carolina Utilities Commission:

We expect the NCUC will still "be around" in 2000, and beyond! We do not anticipate that the configuration of the NCUC will undergo significant change before 2000, but restructuring should be "open" to meet changes in regulatory response to changes in regulated enterprise. [End of Wells response]

Response by Roger Hamilton, Chairman, Oregon Public Utility Commission:

Yes, I expect the Oregon PUC will be around in the year 2000, if electricity, gas, water, and telephone services remain natural monopolies at the distribution level, and the legislature upholds its commitment to quality regulation. It will be more difficult to ensure adequate funding of energy conservation and risk-averse renewable and universal telephone service, among other public policy goals. But it is clear that the need to assert leadership in these areas will fall more heavily on the PUC's shoulders as short-term prices and profits supplant long-term generation and societal interests in the mindset of utility directors.

The deregulation mantra was chanted as loudly in Salem as it was in Washington, DC, last spring, and the federal preemption of intrastate trucking provided an opportunity for legislators to

eliminate the PUC's transportation function. This, in turn, gave us the opportunity to look at ourselves and ask, with sharpened focus on energy and telecommunications, what future five years out would drive our structure.

In electricity, I think there will be pressure on utilities to divest generation and transmission assets despite our low regional costs. But, unlike telephones, it is unlikely that new technologies will overwhelm franchise customers at the distribution level. The electricity industry in 2000 will look like natural gas today, with only LDCs regulated. More, not less, staffing may be required to monitor

performance-based ratemaking and pick up responsibilities passed to the states by the feds. Of course, an alternative scenario of inflationary fuel prices and utility incremental costs rising more rapidly than embedded costs is quite possible in this uncertain world. In this case, traditional regulation remains compelling.

Telephone regulation will become increasingly more demanding and more complex as the PUC fosters a competitive environment in an industry still dominated by Baby Bell and the long-distance giants, and customers who perpetually redefine service standards. There will be less rote determination of rate levels and returns, more refereeing among numerous competitors. Universal service standards will change, but the need to enforce them will not go away. Concerns about privacy, consumer advertising and education, and the sale of exchanges to jockey for market niches will increase.

Finally, water regulation