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LG&E?s Don Santa: Choice in a Low-Cost State

Fortnightly Magazine - June 1 1998

their companies' investments. Do you agree?

I don't know. When I was at the commission I made an effort to try to get more up on how the financial community viewed things, talking with analysts in New York¼ but if this is what companies believe, they need to take the initiative to change it. Try to educate the regulators and try to have them understand the financial constraints and conditions that the company is operating under. Now, it remains to be seen what kind of impact it will have, but the recent FERC technical conference on financial conditions in the natural gas pipeline industry is a good step in trying to get that kind of input in there. When you're a regulator, and you're subject to the ex parte rules and all that, what you see in the record of a case is pretty much limited to what you see on paper, and usually the financial community doesn't participate as intervenors in a case.

How do you view the role of regulator now that you're on the other side?

I would hope that regulators take the view that I tried to take when I was at the [FERC], which was to recognize that there are certain segments of the industry [that] still are effectively monopolistic in function and need regulation, but by the same token you have to have some trust in the market with respect to those segments that either are or have the potential to be competitive.

You've got to try and put the incentives in the right place to get people to be efficient. I also think, and this is something I appreciate much more from having been in the industry for [a few] months, that with the market being as fast paced as it is, the delay in getting word from regulators really does hurt, it really does make a difference as people are trying to adapt to what's going on out there. A merger like ours, which isn't one of the biggest mergers sitting out there, nonetheless affects real people in terms of trying to figure out where they're going to be in the new company. There's a role for regulation (em you want to review these things carefully and responsibly (em but by the same token there has to be a recognition that delay brings with it very real-world costs.

Recently, at an American Bar Association conference in Denver, I was talking with a lawyer who does work for PacifiCorp, and he was talking about their transactions with The Energy Group. He mentioned that when the mergers and monopolies commission in Britain receives a merger application they schedule it for decision. It may be [several] months off, but they basically say, "You'll have an answer by this date." And then they commit themselves to doing it. I know that the FERC is strapped resource-wise and has to "do more with less," given budgetary constraints, but nonetheless I think there's some real importance to having word from the regulators, whether it be good or bad, so that