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PUCs in 1997: Managing the Competition?

Fortnightly Magazine - January 1 1998

for the utility. Public review and comment on such plans is inconsistent with the competitive industry envisioned for the state, the commission said. %n14%n

The California Public Utilities Commission ruled that two innovative energy-efficiency pilot programs run by Southern California Edison Co. and Southern California Gas Co. might improve energy efficiency in the state, but should not continue beyond the pilot stage. It found that the pilots could create unfair competition in the energy market. %n15%n

In Wisconsin the state commission authorized Wisconsin Electric Power Co. to recover $460,000 for the cost of an advertising program designed to inform ratepayers on issues involved in electric restructuring, but questioned whether the advertisements used by the company represented an "objective viewpoint" on the issues. %n16%n

The unbundling of generation from transmission and distribution naturally forces regulators to draw distinctions in retail markets. In California, the commission barred Pacific Gas and Electric Co. from discounting any part of its current rates, except its distribution charge. The PUC ruled that discounts aimed to avoid bypass of the regulated transmission and distribution network would violate the fundamental goal of its restructuring policy - i.e., promoting competition and separating the merchant function of energy from the delivery function. %n17%n

Unbundling presents another intriguing question: Should PUCs open metering, billing and collection functions to competition?

In California, the PUC unbundled "revenue-cycle services,"deciding that competitive providers of electricity may offer their own consolidated billing, metering and other related services rather than relying on the established electric utilities. But in Pennsylvania, regulators expressed concern over the effect that would have on existing quality of service. Thus, the PUC said that electric distribution utilities must continue to provide certain customer service functions, including consolidated billing and complaint. It also ruled that at least for the time being, allowing distribution companies to continue to control "all physical activity" related to metering would offer the best guarantee of maintaining existing service standards as required under the state restructuring act. %n18%n

Retail Gas Choice: Beware of Price Spikes

While federally inspired reforms such as pipeline rate unbundling and open access transportation requirements have multiplied supply options for large customers, the expansion of customer choice programs into the residential natural gas market is the topic of the day at the state level.

In Ohio, for example, East Ohio Gas Co. %n19%n and Cincinnati Gas and Electric Co. %n20%n promoted new pilot gas programs for smaller customers. Public Service Company of New Mexico launched a major new program to help small-volume customers take advantage of alternate sources of gas supply. %n21%n And in Wyoming, KN Energy Inc. was allowed to expand its year-old retail access pilot, Choice Gas Service Program, after the commission learned that nearly 95 percent of participating customers had saved 7 to 12 percent on their electric bills. %n22%n Other states with new programs include Pennsylvania, Michigan, Florida and New Jersey. %n23%n

A significant issue in opening the retail market concerned utility control over storage facilities and upstream pipeline capacity. This concern was raised in Ohio in late 1996, %n24%n but was met squarely