Perspective

Fortnightly Magazine - February 15 1996
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If you attended any energy conference in the past year, even one on natural gas, I am confident that at least one panel was devoted to the restructuring of the electric industry. Everyone (em Congress, the Federal Energy Regulatory Commission, state legislatures, state public utility commissions, electric utilities, and large industrial users (em appears to be jumping on the restructuring bandwagon.

Statements based on little factual data or evidence (em such as "restructuring will benefit all customers" and "restructuring will lower all customers' bills" (em are accumulating faster than the snow that buried the East Coast last month. It's an accepted truism that a statement made often enough becomes a fact. However, before we create more industry "facts," we need to ask ourselves a number of fundamental questions.

What are we trying to accomplish?

If the answer is lower prices, is restructuring the electric industry the best and least disruptive solution? How many high-cost (i.e., nuclear) electric utilities are there? Has a cost/benefit analysis established the most effective means to lower prices for high-cost electric utilities?

Should all customer classes benefit immediately from restructuring? Almost all of the experimental programs currently being requested by utilities appear to focus on reducing rates for large and medium-sized industrial and a few large commercial customers. Small industrial and commercial customers and residential customers are merely being promised "benefits" some time in the next century. Will all customer classes benefit immediately from restructuring? Do CEO claims that they want theirs to be the "best" electric company translate into lower prices for all customers?

Who should bear the burden of stranded costs?

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