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Electric Restructuring: Before, During and After

Fortnightly Magazine - November 15 1999

that, besides ourselves - I may be a good regulator, but the market is much better. [End of Garcia interview]

Richard L. Mathias, chairman of the Illinois Commerce Commission. Illinois is in the process of restructuring electricity.

What did you learn from other states during your restructuring?

Each state is unique. What we learned is that restructuring is a very complex issue. Various terms or provisions or legislative policy enactments impact different utilities in different manners.

We have eight or nine - depending on how you count - major Illinois electric utilities. They each do business quite differently. Therefore, it is a challenge to promulgate rules that don't discriminate against one utility over another, as well as don't discriminate against the customers and the potential competitors of the utility.

Could a high wires charge erase customer savings in generation?

The incumbent utilities want to put as much of the cost into the transmission and distribution charge, which is continuing to be paid by all of the users of electric service in Illinois, [as opposed to putting the charges] in the generation portion, which is retained by the utilities in Illinois and which they have to sell their generation capacity on a more competitive basis. So obviously, theoretically, utilities would like to load up the transmission and distribution charges, which are paid by all of the customers, as [opposed to] keeping their generation costs as low as possible because those are not competitive services.

How did you make sure that didn't happen?

Through a long and arduous tariff proceeding called the delivery services tariffs, which are still before the commission, [then] were decided in October and now petitions for rehearing are before the commission. It was a very, very high-profile and very time-consuming process of deciding the amounts of the delivery service tariffs in Illinois. That was really an allocation of the costs - what those costs were and whether they should be allocated to delivery services or whether they should be allocated to generation capacity.

Was that the toughest problem?

It was one of the toughest. We continue to refine how the incumbent utility can interact with its affiliates. That is going to be an interesting dialogue. How do you have nondiscriminatory activity between the incumbent utility and its affiliate? You want to make sure there is a level playing field between the utility and any marketing and generation affiliate against the competitor who is out there in the marketplace.

What in your background prepared you for restructuring?

I have been a businessman in various executive positions in a number of companies over the past 25 years, and I think I have an understanding of how business operates and also the need for change in businesses, as well as recognition of the need for change in regulatory agencies.

Utility regulation that was in vogue in the 1980s seems to be in need of change if it is going to meet the demands of the new millennium. In that, I mean speed. Regulators can't sit back and take years to decide issues.