The California Public Utilities Commission has rejected a request by Pacific Gas and Electric Co., for a waiver from scheduled rate reductions mandated under a three-year base-rate plan approved...
Deregulation and Mergers: Is Consolidation Inevitable?
program. One advantage that the highly consolidated telecommunications industry had over the fragmented electric power industry lies in research support. Telecommunications could afford to be serviced by the unique Bell Laboratories. The electric power companies created the Electric Power Research Institute, but this, whatever its obvious virtues, could hardly compete with the Bell Labs. Hence, a more consolidated power generation industry could better afford sophisticated management and research.
These reasons leading to consolidation may or may not prove substantial or persuasive. They may figure in the pressure for merger and form an integral part of the deregulatory process. Competitive conduct is bound to impact structure. It will take time and study to know precisely the form that this process is taking and how it may best be managed in the public interest. It is a natural process and must be accommodated for a regime of deregulation to prove genuinely viable. t
Judge Richard Cudahy sits on the U.S. Court of Appeals for the Seventh Circuit. Earlier, he served on the Wisconsin Public Service Commission.
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