Fortnightly Magazine - July 15 1997

PECO Gets $1.1 Billion

At a proceeding marred by hecklers and the arrest of five protesters, the Pennsylvania Public Utility Commission finalized a preliminary decision awarding PECO Energy Co. $1.1 billion of its requested $3.8 billion in stranded cost recovery (Docket R-00973877).

On May 8, by a 4-1 vote, the PUC issued a nonbinding order to allow PECO to refinance the $1.1 billion in stranded costs at lower interest rates through issuance of asset securitization bonds to be paid over 10 years.

Byline: 
Lori A. Burkhart
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Ratepayers Will Save

I read with interest your editorial regarding securitization in the April 15 edition of PUBLIC UTILITIES FORTNIGHTLY. As the chairman of the New York State Standing Committee on Energy & Telecommunications, I must take issue with your inclusion of statements from opponents to such legislation without providing its sponsors with the opportunity to press their case.

The Senate, on March 19, 1997, passed legislation that I sponsored at the request of Gov. George E.

Byline: 
James L. Seward
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Competition Bill Dies in Connecticut

Connecticut's proposed electric restructuring legislation, H.B. 6774, died after being dropped unexpectedly by the state Senate. Backers of restructuring legislation plan to reintroduce the bill next year when the new session begins in February 1998.

The bill would have opened markets to competition Jan. 1, 2000, coupled with a 10-percent rate cut. Under the bill, utilities would have recovered up to 65 percent of stranded costs for above-market nuclear investments and 100 percent for regulatory assets. The bill would have allowed securitization of those costs.

Byline: 
Lori A. Burkhart
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Real Water Rates on the Rise

While the prices play catch up, utilities and regulators should start looking for ways to mitigate costs.

Water utility rate increases have outpaced those of other utilities. In fact, water rate increases since 1984 %n1%n have surpassed the overall rate of inflation. Yet among utility services, water remains a real bargain; consumers spend less on water than on any other utility.

Byline: 
Janice A. Beecher, and Patrick C. Mann
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Perspective

Does a monopolist aim to maximize profit, or simply to hide from the antitrust laws?

AT&T's absolute monopoly in the switched long-distance telephone market ended in 1976 when MCI rolled out its Execunet service. Twenty years later economists still question whether AT&T can influence the market price of long-distance services.

Recent empirical studies are split on the question, sometimes finding AT&T has considerable market power, and sometimes finding it has none.

It appears that economists studying the long-distance industry may be misinterpreting the historical record.

Byline: 
James A. Montanye
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Increased Exports to Northeast Prove a Dubious Proposition

New England states, feeling threatened by increased pollution from Midwest coal-fired generation, recently began lobbying for tougher national environmental standards tied to electric deregulation legislation. The perceived threat is based on the belief that coal-fired plants in the Midwest with excess capacity will increase exports to higher-cost New England states. This increased generation and exportation could lead to more pollution in the New England states.

Byline: 
Christopher Seiple
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Special Report

Feds prefer legislative solution for now, but warn of bid-rigging, cartel behavior later on, after deregulation.

One of the nation's top antitrust officials told the House Judiciary Committee in June that moves toward utility deregulation should focus first on open access to the transmission grid (em and then resolve that problem through rulemaking or legislation, not antitrust enforcement.

"Antitrust is probably not the best way to address access," said Robert Pitofsky, Federal Trade Commission chair.

Byline: 
Joseph F. Schuler, Jr.
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How One Company Used ABM

Changing the culture at American Electric Power.

As the electric industry gears up for competition, attention shifts to things like load migration, technology and customer service. The pressure is rising like never before to identify, catalogue and track costs.

Thus, at American Electric Power Company, we decided two years ago to reengineer much of our internal financial management apparatus, including systems, databases and technology. With the help of consultants, we developed, designed, tested and implemented an activity-based management system.

Byline: 
Henry Fayne, and Jim Clark
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Frontlines

When I took this job three years ago, I posed the question, "Price or Service?" in the title of my first frontlines column.I suggested that natural gas utilities appeared willing to sell on price, but not electrics. The CEOs all claim that electricity has become a commodity. But I'll bet the franchise that electric utilities haven't yet figured out whether they are selling electrons (a commodity) or comfort and peace of find (a niche service).

Byline: 
Bruce W. Radford
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