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Fortnightly Magazine - March 15 1996

Price Reform and Universal Service: Not Mutually Exclusive

Peter K. Pitsch and David P. Teolis

When the Federal Communications Commission (FCC) instituted the subscriber line charge (SLC), telephone household penetration rates actually increased, even though local rates rose when the SLC was rolled in.

NOPR Tariff Formulas Breed Discontent

Lori A. Burkhart

The Federal Energy Regulatory Commission (FERC) has denied rehearing of an order authorizing Duke Energy Marketing Corp. and two affiliates, Duke Energy Marketing Corp. and Duke/Louis Dreyfus L.L.C., to sell power at market-based rates (Docket Nos. ER95-755-001, et al.).

Rural Electric Tries a Little English

Joseph F. Schuler, Jr.

"Anyone who assumes rural electric cooperatives will not be fully engaged in whatever system we have . . . if they assume the more competitive it becomes, the less we'll be engaged . . . they're very wrong."

(em Glenn English, CEO,

National Rural Electric

Cooperative Association

Ten terms as a U.S. Representative from Oklahoma's Sixth District taught Glenn English how to build consensus.

FERC Oks Steuben Storage Field

Lori A. Burkhart

The Federal Energy Regulatory Commission (FERC) has issued a certificate allowing Steuben Gas Storage Co. (SGS) to construct and operate an underground natural gas storage field, the Thomas Corners Field.

In a preliminary finding that SGS lacked market power, the FERC authorized the company to charge market-based rates, subject to reexamination (Docket Nos. CP95-119-000 et al.).


Bruce W. Radford

You've heard talk lately about the convergence of electricity and natural gas. That idea has grown as commodity markets have matured for gas and emerged for bulk power.

But some economists take a different view. They see the real convergence occurring between electricity and telecommunications. I'm not talking about the "smart house" or fiber-to-the-whatever. Instead, how is the product is created?

Unsubscribed Capacity: A Growing Problem

Lori A. Burkhart

An LDC Caucus report, An Issue Paper Regarding Future Unsubscribed Pipeline Capacity, forecasts an increase in reduced subscriptions of firm capacity due to a combination of factors:

s Shifting patterns of gas purchasing will reduce the need for transportation over certain pipeline corridors.

s Single-fixed-variable rate design makes capacity reservation costly for LDCs with low load factors.


Peter C. Nelson was named president and CEO of California Water Service Co. Nelson also will be a director. He comes from Pacific Gas & Electric Co., where he was v.p.-division operations. He replaces the retiring Donald L. Houck.

Jack Lucido of ANR Pipeline Co. was elected to the American Gas Association's pipeline research committee, succeeding Gary Walker of Pacific Transmission Co.

The Electric Power Research Institute hired Karl G. Van Orsdol as senior manager, international relations.

Will Residential Customers Pay for Competition?

Phillip S. Cross

High industrial electricity rates are often blamed upon current regulation. Some state regulators respond with broad-based reforms; others simply reallocate system costs from industrial rate classes to rates for more inelastic customers (em namely, residential users.


PBR's Changing Face

William D. Steinmeier ("Price-Based Regulation: The Elegance of Simplicity," Jan. 15, 1996, p. 35) presents an unconvincing and misleading case for performance-based regulation (PBR). He is right that PBR is potentially simpler to implement than cost-of-service regulation and provides a strong incentive for companies to cut costs. However, one of his main points (em that profits don't matter, only prices do (em applies only to competitive markets.

Retail Rate Subsidies - Recent Cases

Nearly every major rate case over the past several years focuses some attention on removing subsidies running between rate classes.