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Will Residential Customers Pay for Competition?

Fortnightly Magazine - March 15 1996

lower than they would be under traditional ROR regulation.

The law "may well prohibit" a proportional increase to basic service rates that is greater than the proportional increase in costs, the PUC added. The new price-cap plan allows a rate increase for basic service only if an identified price index (inflation less productivity, plus or minus exogenous changes) is positive, and then only by the amount of increase in the overall index. Re New England Telephone and Telegraph Co. dba NYNEX, 162 PUR4th 38 (Me.P.U.C. 1995).

Does the telephone industry provide some analogy as to what might happen to energy rates as market restructuring proceeds? The Connecticut Department of Public Utility Control (DPUC) examined that question when investigating whether to promote wheeling services for retail electric consumers: "While the beneficial effects of telecommunications competition may someday be experienced in the electric industry, the [DPUC] finds that there are fundamental differences between the technologies." The DPUC cited rapid innovation in technology, which opened new markets and increased usage for telecommunications companies. Their enhanced financial position allowed the companies to risk investment in new technologies and to recover stranded investment more readily, but the same is not true of electricity, the DPUC observed. While gas turbine improvements mark an engineering breakthrough, such a development does not make the industry ripe for full-fledged competition. Re Investigation into Retail Electric Transmission Service, 155 PUR4th 209 (Conn.D.P.U.C. 1994). t


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