Fortnightly Magazine - July 15 1997

Competition Bill Dies in Connecticut

Lori A. Burkhart

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.

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Real Water Rates on the Rise

Janice A. Beecher, and Patrick C. Mann

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.

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Perspective

James A. Montanye

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.

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