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High Voltage: Affiliate Rules Shock Utility Markets

Fortnightly Magazine - January 15 1999

California. "It's a foregone conclusion that the utilities are using every angle they can and seeking every cover they can and that's to be expected in the early goings of the deregulated market where the incumbents do not want to give up market share.

"If the regulators had really been visionaries and leaders, they would not have allowed them to use the name to begin with, so to tell them it's OK to use the names as long as you use the disclaimer - who reads the disclaimer, for crying out loud?"

Scott Logan, a regulatory analyst for the California Office of Ratepayer Advocates, says the PG&E decision was a good one. "Our filing had recommended a $10 million fine," he says. "But this level of fine is satisfactory, in the sense it is a fine significant enough to send a message to PG&E that it was a serious violation."

James W. Tarnaghan of Goodin, MacBride of San Francisco, an attorney for Enron Corp., says the fine does send a message.

"It sends a good message from those of us who had supported the affiliate rules last year," he says. "And the message would be that the commission is still standing behind the rules that they adopted last December and they do intend to maintain those rules and to vigorously enforce violations.

"I'd like to think other states looking to California will see that California meant what it did last year. There has been an effort to portray California as backing away from its rules and ¼ I think and I hope this will send the message that California is serious and will remain serious about this."

Did PECO, PP&L Misstep?

California isn't the only state serious about its affiliate rules or codes of conduct. Pennsylvania, at the end of 1998, was operating under a panoply of interim rules, drafted prior to electric pilots and during electric restructuring proceedings. The Pennsylvania commission also had proposed a rulemaking (Docket No. L-980132) that will result in adoption of "Competitive Safeguards." At press time, the commission was reviewing comments filed in response to the proposed rulemaking.

Also at press time, the commission issued interim guidelines addressing electric distribution companies' provider of last resort functions.

The Nov. 19 interim PLR guidelines looked like a shot to the chin of PECO and PP&L, who just over a month earlier, on Oct. 6, had been targets of a petition for an emergency order and complaint filed by the Mid-Atlantic Power Supply Association (R-00993953). According to its filing, MAPSA claimed that the two companies were engaging in anti-competitive practices by advertising provider of last resort services in ways that would cause consumers not to participate in the competitive electricity market.

MAPSA noted that in its mailings to customers, PECO used customer account numbers and information, promoted its PLR service and denigrated electric generation suppliers' options. According to the marketers' association, PECO's deceptive and misleading statements in newspaper ads implied customers might need special meters if they used competitive suppliers, that there may be a fee to switch, that there