Lately I'm reading up on the new Telecommunications Act. Last week I printed a copy from the Internet and stuffed it in my briefcase. Each night on the train I give it a go and skim a few sections...
At Addison Mizner's pink fantasy on a Spanish theme, the Boca Raton Resort, the Edison Electric Institute (EEI) waited for Godot. Yes, that was the theme of EEI's 30th financial conference, and its first plunge into literature. You may remember the play, in which two hobos talk endlessly while waiting for the mysterious Godot, who has not yet arrived by the final curtain. In the same way, electric utilities and those who invest in them have been awaiting the advent of restructuring, the California remake of the industry, retail wheeling somewhere, and the wipeout of stranded assets. But utility stocks have risen despite the forebodings, and those watershed events may not take place until next year, or 10 years from now (em or never.
The opening speakers neither poured oil on troubled waters nor dropped any matches into the oil. They delivered a mixed message in an atmosphere of calm, apathy, or complacency. It was hard to tell which. Ex-congressman Philip Sharp laid out the legislative genesis of change, pointed to the political potency of the Electricity Consumers Resource Council, noted the bias in favor of competitive solutions, and concluded that any utility with a policy of waiting for Godot is looking for trouble. Consultant Howard Pifer proceeded to give a recipe for the future of the industry that contained all the usual ingredients: a competitive model, a better pool than that of the United Kingdom, vertical unbundling, better service, and lower prices (em just a lot of work on details still needed. Nothing new there.
The government people who arrived to help us presented a less direct but similar message. Gregory Conlon of the California Public Utilities Commission said that system change comes of necessity rather than desire. The pricing situation in California provided a compelling need to do something. Strangely enough, the disputes in California seem to be more about timing than about substance. Customers will have choice. The Federal Energy Regulatory Commission's (FERC) James Hoecker emphasized nondiscriminatory transmission access, and discussed a host of legal issues in a manner that indicated that the FERC intends to keep its collective hand on the tiller. James Scott of the Florida State Senate demonstrated why the U.S. electricity system will turn into a crazy quilt or have its shape forced by the Feds. Scott made it plain that he likes the Florida utility system as it is, and doesn't believe in fixing what isn't broken.
Opening session over. No earthquakes. No surprises. Few questions. The concurrent sessions the next day (em which covered power marketing, municipalization, product differentiation, and financial restructuring (em harbored few surprises either, although I cannot testify to that, since I wasn't able to attend all four sessions.
What surprised me was the general air of complacency: few sharp questions, few sparks, few new concepts, few outstanding investment ideas. Fewer foreigners came. Fewer analysts came. And the companies gave fewer presents to visiting analysts (this was the year of the mousepad, incidentally). The speakers dealt with issues largely in legal or institutional veins, ignoring the fact that technology produced