Midwest panel fears service decline, sees small companies as speed bumps on road to competition.
"Mergers and restructuring" could have described the panel, but "Four Weddings and a...
Change was the operative word this year in New Orleans at the annual gathering the National Association of Regulatory Utility Commissioners. Bob Anderson, Montana commissioner and outgoing president of NARUC, cited global competitiveness, technology and a political swing toward state's rights in his opening address. "State commissions have to respond to these powerful forces," he warned. "We don't have a choice."
Adding to the mood was the announcement, two days earlier, of a merger between IES Industries Inc., Interstate Power Co., and WPL Holdings, Inc. Interstate Energy Corp., the new parent, will serve more than 1.2 million gas and electric customers in Minnesota, Illinois, and Wisconsin. After shareholder and regulatory approvals, the corporation will rank 34th among U.S. utility holding companies.
Such mergers are the future, said Robert P. Wason, chief financial analyst at the Securities and Exchange Commission's (SEC's) Office of Public Utility Regulation. By the end of 1996, 35 states will likely be affected by registered holding company operations, up from 26 states now (see sidebar). If the Public Utility Holding Company Act (PUHCA) escapes Congressional repeal or reform, registered holding companies could double to 30. Potentially, a third of the top 30 investor-owned utilities (IOUs) would become registered holding companies, Wason said. These IOUs are "major players" in acquisitions overseas.
Wason said the SEC wasn't taking sides in the PUHCA debate, although it wants to ensure that states have access to holding company books and records. The SEC also wants to be able to audit companies and affiliate transactions. "Competition is here to stay, and there needs to be a balance of monitoring and measuring the effects of that competition upon investors and consumers," Wason urged.
Klaus Bergman, CEO of Allegheny Power System, Inc., came out strongly in favor of PUCHA repeal: "In today's world, PUHCA is not only no longer necessary, but actually counterproductive; it hinders competition and deprives the customers of the registered systems of competitive benefits."
Craig A. Glazer, chairman of the Ohio Public Utilities Commission, noted that PUHCA's passage in 1935 put an end to industry bidding wars. NARUC protested the Act in favor of state's rights, but federal intervention won out. Now, however, states have working relationships with these companies, Glazer said, citing the "harmonius regulation" that developed between the Ohio commission and CINergy, another 1995 merger. "My message to the registered holding companies is, if you want this to happen in Congress, maybe you can just ram it through, . . . but it would be really important to have state regulators on your side."
More talk of change was voiced by the electric utility restructuring panel. William D. Harvey of Wisconsin Power & Light Co. argued that while regulators change to adapt to the market, utilities must also: "It is time . . . for utilities to start making money the way any other company makes money (em by earning it through performance, not by redecorating our offices and putting the cost in our rate base."
Harvey took co-panelist Susan Tomasky, FERC general counsel, to task on stranded investment
recovery: "Not only