Utility executives face volatile energy markets, skyrocketing fuel prices, and changing federal energy policies. How are utilities benefiting from the turnaround in energy trading?
Electric Restructuring: Before, During and After
has been traditionally an exporter of power and it looks like that will not change in the near future. [There have been two primary concerns since I've been here. The first] has been focused in Northern Illinois and that is to make certain that the generation capacity, which has been paid for or is being paid for by customers, is, in fact, operating. Of course, that comment is directed towards the nuclear facilities owned by companies in Illinois.
Secondly, our concern is over the reliability of the transmission and distribution system - to make certain that the power which is generated can be transmitted and distributed to the end-user. We have had some difficulties in that regard in Illinois.
How does FERC's RTO plan figure into that?
We are a strong supporter of effective, vibrant regional transmission organizations and, in fact, have been pushing FERC to take more aggressive action in this regard.
What about infrastructure?
What has been interesting to us is that one of the consequences, whether intended or not, of the restructuring law in Illinois has been the sale or merger of five of the six or seven largest Illinois electric utilities. Four Illinois electric utilities have been purchased by out-of-state companies, and the fifth, Commonwealth Edison, is in the process of merging with PECO.
What does that mean for competition?
It is yet to be seen. It is obvious that there has been a rush to consolidation and whether that was triggered intentionally or unintentionally by the Illinois law, I don't know. That is certainly one of the definite results of the Illinois restructuring law.
How will regulators rate their performance in years to come?
This is an interesting question that all utility commissioners will have to answer in the future. That is exactly the process that we are going through in Illinois in ¼ the so-called "millennium review" commission, which we have established to look at the operation and objectives of the Illinois public utility commission.
We have to make our regulation more relevant. The old rate-of-return regulatory schematic is certainly no longer in vogue and I question whether the quasi-judicial approach to regulation ¼ is any longer relevant. It certainly can't be the only model that public utilities commissions can follow in the future. There has to be a more policy-making role and I would submit that we have to do a better job of collecting credible data and distributing that data to users so that the competitive market can work.
I look at the example of the Securities and Exchange Commission, which has rules and regulations as to the type of information which has to be reported to the SEC. [The] information is made publicly available and that allows the free market to operate.
I don't think we are doing that now. I don't think any commission is doing that now. To think that you can go from a monopolistic environment to a competitive environment and make no changes in your regulatory structure, I think, is naive.
How long before you decide you were successful