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Financial News

Fortnightly Magazine - April 15 1996

wholesale price of power reaches 3¢/Kwh after 2000, the rate for those choosing an alternative supplier would only have dropped about 10 percent, to 8.5 cents, five years from now.

NEES has probably negotiated the most favorable plan it could. However, most states are unlikely to allow a utility to recover all of its stranded costs. Nor is it likely that customers will be patient enough to wait so long to reap the benefits of competition. NEES's success with this proposal derives in large part from negotiating directly with legislators who could not match its expertise.

The lesson for utilities is to seek restructuring settlements out of the public view, preferably with parties that normally do not work with utility matters. The lesson for customers is to demand open negotiations that involve evidentiary hearings and participants with as much expertise as possible. t

Charles M. Studness is a contributing editor of PUBLIC UTILITIES FORTNIGHTLY. Dr. Studness has a PhD in economics from Columbia University, and specializes in economics and financial research on electric utilities.

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