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The 1998 Utility Regulators Forum Four States, Eight Views: Looking Back on Deregulation

Fortnightly Magazine - November 15 1998

wires company - GPU and Duquesne.

"We're looking at that. The law does not require divestiture, nor does it prohibit it. There are issues to deal with on both sides. For example, with divestiture, which of course the marketing community is much more in favor of, what do you do with the net proceeds of divestitures in terms of crediting it against stranded investment? For example, how do you make sure those assets are sold at an optimum market value so you can maximize the proceeds coming back?"

Who's Best?

"Pennsylvania. ¼ because we've taken a great deal of time and energy to try to bring all the interested stakeholders to the table, hear them out and try to develop consensus approaches where we can iron out our differences through negotiations wherever possible ¼ When the PECO restructuring proceeding was concluded, we came back and renegotiated the settlement that avoided that litigation. When the PP&L decision was final and litigation was filed, we came back to the table and negotiated away those appeals. We're doing the same with the two GPU companies right now.

"We're fortunate in Pennsylvania that we have people that are very interested in making this work, making it a model approach to deregulation and as a result they're willing to compromise for the greater good ¼ I don't know whether other states are dealing in the same kind of interests at those tables."

John Hanger

Former Pa. Commissioner

Deregulating Over Again.

"The lack of either a clear national policy requiring divestiture or a clear national policy requiring independent system operators has stunted the wholesale markets and has created bottlenecks and other forms of market power.

"I believe the country would have been better served if we had a national policy requiring divestiture of generation assets from transmission assets. I think it's an open question whether an independent system operator is an acceptable substitute for that preferred policy. ISOs might work acceptably to meet market power concerns and other issues if they were ubiquitously created and big enough to really prevent the balkanization of the marketplace."

Learning From Mistakes.

"What I learned is the electric utilities have a huge amount of political power in every state capitol. I mean I knew that going in. We assessed it beforehand and I think in Pennsylvania at least, one could make a good argument that, despite that significant amount of power, there's been a reasonable result.

"And for state officials who are interested in competition and want to see competition, they have to understand that somehow or another that FERC has to be made an ally and not an enemy. And that there has to be flexibility and ambiguity about where these lines are between state and federal authority. And if you insist on drawing hard and fast lines, all that's going to do is give comfort to the enemies of competition."

ISO vs. Transco.

"As somebody who's just endorsed a national policy of divestiture, I think ideally we would have had a Transco model.

"Should states be more involved at NERC?