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1996 Regulators' Forum

Fortnightly Magazine - November 15 1996

hurting families, the consumer, and the small businesses."

Q. As the needs of rural and urban utilities grow further apart, can you envision a split within NARUC along those lines, with two associations formed to fill distinct needs?

A. "No, I don't see a split in NARUC over it. I certainly see NARUC sitting up and taking notice. . . . There may be some changes. They're going to have to recognize [the situation], more so than they do. And I think they're beginning to. Everything can't be run for the benefit of California. Oh, that's not a nice way to put it. But people are going to get hurt financially with deregulation if we're not very careful." [End of comments by McCaffree]

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Comments by James J. Malachowski, chairman, Rhode Island Public Utilities Commission

Q. NARUC is restructuring. What must it maintain, what must it change, and what qualities must its director have to keep it ahead of industry issues?

A. "NARUC must be realistic about its goals and abilities. I think its unique makeup gives us both strengths and weaknesses. . . . The diversity in the debate is the organization's strength. . . . That same diversity makes it very difficult for us to get consensus. Much of the debate in NARUC at the moment concerns increasing our lobbying effort, and everyone's pointing to the effort that took place on the telco bill. I think that's going to be more unique than the norm.

"Commissioners are politically appointed and therefore, to a great extent, politically connected. . . . We can get entry to members almost immediately on the Hill, Congress. But at the same time, that's a potential weakness as well, again because of the great diversity. Consider the situation if the NARUC position is different than the individual's or the state's position, and I'm in the minority. When I talk to my member, what will my message be? Will it be the NARUC position or the individual state position?"

Q. How active is your state legislature in electric deregulation? When is this participation helpful? When is it intrusive?

A. "It's done. There was a champion for deregulation who was a powerful member of the House the majority leader, Rep. George D. Caruolo. . . . [But] the proposal needed amendment, the legislation was flawed. The process involved the major utilities participating in forum shopping. They saw they could get a better deal in the Assembly than in the commission, and they went and then negotiated secretly and privately with the Assembly to produce a bill. Those were the fellows from Narragansett Electric, which is an affiliate of New England Electric System (NEES). And in my view, the bill minimizes the risk to the utility. It protects them against lost revenues and facilitates reduction in power costs at ratepayers' expense. It allows recovery of 100 percent of stranded investment. . . . So the bill is not a model. And I would suggest to other states that both the process and the result is not something to replicate.

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