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1996 Regulators' Forum

Fortnightly Magazine - November 15 1996

"I think there are some very powerful forces at work. There are tremendous dollars at stake and public utility commissions should not be so naive as to think that these great public policy debates that we're engaging in will carry the day. . . . Restructurings that take place will be done by forging deals based on protection of the incumbents incumbent utilities. I think it's not unlike what happened when monopolies were first formed. They were for very powerful people with a lot of money at stake, who were investing heavily in distribution systems and were afraid of competition. The amount of money at stake is tremendous, and I think the only way regulators will be allowed to be involved will be based upon the extent to which they rule in favor of these powerful forces."

Q. Are industrial and residential consumers pressuring you to deregulate? How do the grassroots politics in your state differ from elsewhere; what defines your political climate?

A. "The powerful forces are beyond incumbent utilities. They include industrial customers. They include independent power producers. . . . The residential consumer's voice I don't believe is being heard to a significant, or sufficient, degree."

Q. What are the pluses and minuses of U.S. Rep. Dan Schaefer's restructuring bill?

A. "I've been so wrapped up with what's happened here, I haven't tracked that."

Q. Your restructuring process has been coordinated with neighbor states. Is this a model for others or could you have done it better and faster had you done it alone?

A. "The effort to coordinate this regionally did not happen to the degree necessary to be considered seriously. . . . In terms of other issues in terms of regional transmission groups and what's happening with the transmission system in an ISO things are continuing and working quite well. In terms of states trying to combine to produce a restructuring model for retail access despite the discussions that took place and the thought to try to approach this from a regional perspective it never developed. There was never any consensus that was brought forward. There was never any effort to model legislation . . . so the discussions about a regional approach to the issue did not develop either fast enough or specific enough to be helpful.

"When we did it on our own, our commission had hearings scheduled on the matter for much of [August] that were moot when the legislation passed. . . . We weren't allowed to go forward. I wouldn't say [I'm] bitter. I'd say 'disappointed' I think, awakened to the reality. I mean we have a utility, NEES, that had a reputation for working with commissions. A very positive regulatory relationship, finding out what commissions wanted and moving in that direction. And in this case, because there was so much money at stake to them, they basically went behind the commission's back, and privately, secretly, negotiated with the legislature. Misled us. [They] indicated they would not be doing that, and then this bill surfaced.

"They were participating in the process