It comes as no surprise that regulated investor-owned utilities (IOUs) hold divergent views on the restructuring of the electric industry. Size, generation cost, transmission access, customer...
Why am I not convinced that electric utilities really want to sell off their generating plants? A wires company--is that something to aspire to? Nobody likes to see wires strung every which way along the street. Isn't that why electric utilities call them telephone poles?
I hear utilities say that power production looks too risky. But is a wires-only strategy a retreat back into the womb of regulation?
If power companies expect rates for transmission and distribution to remain regulated, I'm a skeptic. One reason is what's happening with gas pipelines. In late April, Texas Eastern Transmission Corp. filed a stunning stipulation and multiyear global settlement offering to accept the full risk of future capacity turnback. Texas Eastern would cut gas transportation rates significantly for a long list of local distribution copanies: 17 percent in the first year for Bay State gas; 10 percent for Boston Gas; 16 percent for East Ohio Gas. That doesn't look like a regulated monopoly. (See, FERC Docket Nos. RP98-198-000, RP85-177-126, transmittal leter and exhibits filed April 28, 1998.)
A few weeks back, I received a CD-ROM from General Public Utilities offering a "virtual tour" of its steam, hydro and combustion turbine generating plants. They are all now for sale, along with some 18 other properties, including undeveloped sites (one larger than 1,300 acres) available for construction of new generating facilities. The "demo" CD gave a complete rundown for potential buyers on GPU's Titus plant, a 274-megawatt station (five units: 3 coal-fired steam turbines, two oil/gas combustion turbines), which sits on 33 acres.
If I had video and audio cards installed on my hard drive, I could have watched a movie clip featuring Robert Wise, president of GPU Genco, tell how in October 1997 GPU had "announced its strategic decision." It would sell its generation assets to "direct its resources to the infrastructure or delivery side of the utility business." As Wise explained on the CD-ROM, "We strongly believe that it's to our advantage--as well as to the advantage of new ownership--to be the first group of prime generation assets up for sale in the PJM Power Pool."
When I closed the file and pulled out the disk, I could think of nothing but how much pride of ownership GPU must have felt for its collection of generating assets. Would it feel the same for wires? Beware of what executives "strongly believe." From where I sit, these words speak of more than a tinge of regret.
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