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Fortnightly Magazine - June 1 1996

Corporate Unbundling: Are We Ready Yet? A Bondholder's Primer

Bruce W. Radford

So the Federal Energy Regulatory Commission (FERC) won't break up the electric utility industry. But it may happen anyway (em if not at the FERC's direction, then perhaps under pressure from state regulators who, some say, are threatening to link stranded-cost recovery to vertical disaggregation.

What would a breakup mean for bonds and bondholders?

As we reported last month ("New Corporate Structures Place Bondholders at Risk," May 1, 1996, p.

DOE's Curtis Champions Natural Gas R&D

Lori A. Burkhart

Charles B. Curtis, deputy secretary of the U.S. Department of Energy, spoke on the world energy balance and its impact on U.S. markets at the American Gas Association (A.G.A.) Natural Gas Roundtable on April 2 in Washington, DC. Curtis pointed out the security implications of the latest Energy Information Administration (EIA) forecast that global demand for oil might reach an additional 20 million barrels a day by 2010, and that the Persian Gulf would likely supply 75 percent of that demand.

1996 Electric Stakeholders Forum

Joseph F. Schuler, Jr.

ElectricStakeholdersForum

Consumers

Labor Unions

ManagementDeregulation isn't just for utilities anymore.

This year, PUBLIC UTILITIES FORTNIGHTLY'S

annual Electric Executive's Forum recognizes

the growing constituency of the electric

utility industry.

Utilities, Consumers Oppose Palm Springs Plan

Lori A. Burkhart

The City of Palm Springs, CA, has asked the Federal Energy Regulatory Commission (FERC) to approve a plan allowing it to enter the electric business by installing a second electric meter at customer locations.

Consumers: Cost or Benefit?

s Cherry Picking

"If we ignore history, we're doomed to repeat it. And what happened in the natural gas industry is precisely what will happen. The FERC authorized deregulation of the natural gas industry and, as a consequence, today's retail consumers (em meaning residential retail consumers (em are paying more than twice as much for natural gas as the large industrial users.

CSW Communications Become First Exempt Telco

Lori A. Burkhart

On April 4, less than two months after the Telecommunications Act of 1996 was enacted, the Federal Communications Commission (FCC) granted the first application allowing a public utility holding company, CSW Communications, Inc., to enter telecommunications markets (FCC 96-152). CSW is now an "exempt telecommunications company." The FCC noted that the entrance of utility companies as new competitors could result in lower prices and wider choices for consumers.

Unions: Odd Man Out?

Downsizing

"The short answer is 'yes'. . . . Utilities think they have to cut their costs in order to compete. The easiest way to cut costs is to downsize, get rid of people . . . which means they stop doing the work. And the result is a threat to the reliability of service.

NRC Reconsiders Decommissioning Funding

Lori A. Burkhart

The Nuclear Regulatory Commission (NRC) is considering revising its regulations on nuclear plant decommissioning funding. Under current NRC regulations, adopted in 1988, an electric utility may set aside decommissioning funds annually over the estimated life of a plant. In a deregulated environment, however, a nuclear power licensee could lose its regulated rate base as a source to fund the balance of decommissioning expenses.

Management: Merge,. Divest, or Both?

s Merger Magic

"Occasionally, yes. There are obviously some fairly easily measurable synergies in some mergers. . . . The real issue, however,

is not whether there are savings. The real issue is could those savings have been obtained without concentrating the economic power that goes with a merger?

"Generally, we've dealt with it with judgment.

In Brief...

Sound bites from state and federal regulators.

Gas Franchise Rights. North Carolina adopts new rules on gas service expansion under a 1995 state law forcing incumbent gas distributors to forfeit exclusive franchise rights in unserved territory in certain cases, but allows a two-year grace period if the utility can show a commitment to build plant needed to reach unserved areas. Docket No. G-100, Sub 70, Mar. 19, 1996 (N.C.U.C.).

Firm vs. Interruptible. Idaho OK's proposal by Washington Water Power Co.

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