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PUCs at 2000 - Question OneState Commissioners

Fortnightly Magazine - November 15 1995

affecting natural gas, electric, and telecommunications services, we are, primarily on a PUC staff level, continuing with the concerted effort to develop a more productive and responsive agency structure. A "Steering Committee" was created, which will focus on organizational structure and efficient use of agency resources. An anticipated result of our restructuring effort will be teams of professionals with interdisciplinary skills and multifaceted cross-training. Recognizing that a significant role of PUC staff is to provide support and advice to the commissioners, we are fervently approaching the task of creating the proper PUC structure to carry us past 2000. [End of Hix response]

Response by Edward M. Meyers, Commissioner, District of Columbia Public Service Commission:

As competition proceeds in the energy and telecommunications industries, there is vigorous debate over whether regulation can be replaced by the market to bring about fair, effective competition. Ultimately the market may be the best regulator. The D.C. PSC fully supports the development of competition, and is committed to guiding its evolution so that all consumers receive the benefits.

The transition to a competitive environment poses many potential dangers, especially for residential and small business customers. As monopoly power shifts to oligopsony power, these consumers could be charged high prices that capture a disproportionate share of a utility's fixed costs. Another danger is the uncertainty created for future energy conservation efforts: If the utility must trim costs to lower rates, will DSM programs become expendable? The need for energy conservation will continue in the era of competition. For the consumer, conservation avoids waste and delivers savings. For the utility, DSM can be a marketing tool to retain consumers that might otherwise choose a competing supplier. To the extent that DSM can reduce the costs of providing energy, it must be maintained, with an emphasis on practical programs that offer a tangible pay-off to consumers.

Energy efficiency can also be promoted through market transformation efforts, a DSM strategy that also provides business opportunities for utilities and financial institutions. Market transformation strategies can include (a) low-cost financing to stimulate cus-tomer participation; (b) increased availability of energy-efficient equipment; (c) development of more efficient technology by manufacturers; (d) customer education and training; (e) financial incentives to upstream market players, such as manufacturers and dealers; and (f) early retirement of inefficient equipment.

The role of the federal government will also be key in the competitive environment. Competition will force utilities to control costs. Thus, state PUCs must be more vigilant than ever. The federal government should also become more active. Over time, all energy service providers should have to comply with more stringent clean air requirements; with stronger efficiency standards - for lighting fixtures, appliances, industrial motors, heating and air conditioning equipment - and with more rigorous building codes designed to minimize waste of energy resources.

With integrated resource planning, we thought we knew what it took to provide reliable service and lower energy bills. Now we are not so sure. The District of Columbia has several large buyers of electric services, such as the federal and D.C. governments, apartment and office buildings,