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Inventing a Business in Wires & Pipes

Fortnightly Magazine - June 15 1998

any problem with us continuing to use our corporate name in another subsidiary of GPU," Hafer says. "And I am not expecting that there would be any prohibition against that."

The CEO says GPU will leverage its corporate name by being a "world class" provider in the regulated side of the business, under the name of GPU Energy, or GPU PowerNet or some other GPU T&D moniker. Then, it will be recognized for superior performance when it comes knocking on the door as an unregulated services provider. The unregulated GPU Advanced Resources company is participating in Pennsylvania pilot programs in retail sales, among other activities.

"I believe that as long as the companies, such GPU and other currently regulated companies, don't do anything foolish - that is, continue to play in an open and fair way - that there's no reason we should be prohibited from using our name," Hafer says. He says if GPU can provide more products and better service at lower costs, "God bless them. And that's what the regulators and the legislators and the customers should want. And if it's Enron that comes in and can do it, then so be it."

However, at press time, it looked like the only place Enron Corp. was going was out of the states that promised "regulated" and costly competition, including GPU's home state of New Jersey.

Limited by Numbers?

Hafer suspects that T&D companies will have to be larger than the 2 million customers GPU now claims in the U.S. to continue doing business.

"I believe just the pressures, the political, regulatory, governmental pressures that will be brought to bear as the economies and services of the larger companies become obvious will make it very difficult for the smaller companies to stay in business," he says. "Clearly, 2 million customers, in my mind, is not big enough. The question that everyone keeps wrestling with, though is: What is big enough? There seems to be a consensus opinion building that probably 10 million is big enough, that anything more than 20 would be too big¼ I don't know that there's any real analysis that goes along with that."

"Ten million customers is no magic number," says Ford. "If, however, you're going to use that distribution system and that relationship¼ to sell them other 'stuff,' then the number of customers is very important."

To some degree, Hafer says, the numbers will be driven by who is handling revenue-cycle services. Will the delivery companies continue to be the companies that have the call centers, the billing centers and the meter readers, or will those be contestable services that might be handled by non-utility organizations?

Hafer believes there are too many distribution companies in the U.S. "You don't really have to be an expert in the field to really look at it and say: Why should we have a couple of hundred companies all out there essentially being duplicates of each other, trying to provide the same basic service? It doesn't make any sense."

He pictures maybe 20 to 30 big, efficient T&D companies.