Save a Nickel, Save a Dime
Is One Merger as Good as Another?
In late November, the Federal Energy Regulatory Commission (FERC) put off immediate approval of the proposed merger between...
high-use, most profitable customers? (This phenomenon makes third-party wires supply appear much more attractive. %n6%n)
As the default supplier, the disco must also continue to read meters for urban or inner-suburb customers who may impose high costs because of a low usage profile or higher delinquency rates for bill payments. These high-cost wires customers will pay well below the billing/metering expenses incurred by the disco. As large cities continue to deteriorate, and populations scatter to the exurbs or rural areas, these costs can only go up. Does the disco still want this billing and metering business? Or should this market be served by the city through some kind of social net taxing program?
TRANSACTION OVERLOAD. The disco should prepare itself for the onslaught of third-party generation suppliers that many expect to see when retail electric choice arrives nationwide. Is the disco sophisticated enough to handle this complicated market, with numerous retail supply transactions? Again, with the distribution utility undertaking the obligation to serve (a likely complement to any continuing monopoly franchise), the disco will inherit the task of billing wires customers for buying generation supply services from third parties. %n7%n The disco could find itself responsible for transacting hundreds of unique third-party deals. Will the disco have the infrastructure and technology to bill these purchases hour by hour for each and every customer?
If the disco has performed poorly in meter reading or billing, %n8%n regulation in the new retail choice market may not be something the disco is eager to tackle. If the disco feels confident, it must be prepared to take the risk of investing in hourly meters (or to do the research to extrapolate loads) for most of its customers. It must invest in sophisticated computers to handle all the hourly supply customer transactions.
SYSTEM BALANCING. The disco also must balance any generation supply measured at the meter with power injected into the wires system by generation suppliers. This task will require more sophisticated metering operations. If the disco is prepared to deal with supply imbalances with the customer, how will the disco serve the customer if the supply injection is less than the demand at the meter? The problem may require the disco to purchase backup peaking facilities to meet supplier imbalances with customers (em another risk for the stand-alone distribution utility.
Competitive Metering: Prospects and Strategies
For the stand-alone disco to remain profitable, and to realize long-term economic benefits from deregulation of billing and metering services, the utility must convince its local legislators or regulators to remove the obligation to serve imposed on the distribution company by traditional regulation. In other words, the disco won't be obligated to serve unprofitable billing and metering customers. In a competitive arena, fixed and variable customer charges will be de-averaged. Some customers will pay more depending on location and consumption habits; some customers will pay less. The disco should be allowed to serve cost-effective customers and ignore the rest. %n9%n
REASONS FOR DIVORCE. The wires disco may want a divorce from serving billing and metering markets because it could simplify its