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Electric Restructuring: Before, During and After

Fortnightly Magazine - November 15 1999

can move that along more rapidly as an outcome, that would be great. If it seems to move under its own [momentum], that would be great. One way or another, I somehow believe that we will have a single entity, ultimately.

What about mergers?

AEP and Dominion and CNG went forward and we will see what happens with AEP. Those came before we had explicit authority over holding companies, so those don't count. But as of last week, technically we now have authority over electric mergers.

How will you use that new authority?

The public interest will be the top priority.

How does your restructuring differ from other states'?

We have at most a five-year market development period for any company and that could be truncated or reduced significantly if there is a finding by the commission that competition exists or some certain market penetration has been met. ¼ At the very outset, the transition period or market development period is five years for generation and then it is 10 years for regulatory assets.

How will you know if you have been effective?

In some cases, you will find the [investor-owned utility] generating electricity for less than the prevailing market, and who is going to penetrate that market? No one. The question really becomes, is there competition and is there potential competition.

In some cases, there won't be competition - not because there are barriers to entry but rather because no one can beat the price of the incumbent. Does that mean that there is no potential competition? No, it doesn't mean that. It means that currently there is no competition. So a market could be potentially competitive, but for the time being, there might be no one capable of competing.

Would you assign default customers as Georgia does with gas?

We will attempt to induce shopping. We are supposed to attempt to achieve a 20 percent load shift either midway through the transition period or at the end of 2003, at the latest, and we are going to do that by using shopping credits.

What is your role during and after restructuring?

We will still have jurisdiction over intra-state transmission and, of course, distribution. We will have jurisdiction there. There will be a lot of power marketers, a lot of brokers. I think our role at that point will be to ensure that there are no impediments to the competitive process.

Is your role diminishing?

Oh no, not at all. I think our role will be continuing to regulate distribution, and, I think, play a very significant market-oversight role.

What is the most important thing you have done for competition in Ohio?

The shortness of the length of the transition period has been significant. We have about the shortest as they come. The longest transition period is going to be five years. I would speculate in a couple of cases [it] will be significantly less than five years before those markets are competitive and before the generation is free of regulation.

How has your background helped you address restructuring?

First of