WHY IS ELECTRICITY COMPETITION NOT WORKING? The principal reason is the failure of Order 888 to accommodate the economic and technological constraints of wholesale power markets.
State regulators turn to telecom to salvage the clout they've lost in energy.
State public utility commissions now seem to spend more time on telecommunications than electricity or natural gas. That's their new power base. The telephone local loop marks the one place where state regulators still have clout.
To test that notion, let's see who attended last month's annual meeting of the National Association of Regulatory Utility Commissioners, held in San Antonio. By my count, out of the first 500 registered attendees, over 120 (24 percent) came from telecommunications firms. That figure nearly equals the 135 registrants (27 percent) who came from energy companies.
These numbers may explain why NARUC saved the prime spot in its closing program for William Kennard, chairman of the U.S. Federal Communications Commission, and not for an energy industry star like James Hoecker of the Federal Energy Regulatory Commission, or a congressman pushing federal energy legislation.
That also may explain why Hoecker was not seen in San Antonio. Yet the chairman did travel to Albany, N. Y., the previous month to address the Northeast Interregional ISO Coordination Conference. That meeting, the first of its kind for electric transmission, was set up to help the New York, New England and PJM independent system operators iron out their differences before the FERC is tempted to do it for them by combining the three groups into a single mega-regional ISO. And that may yet happen, judging from Hoecker's remarks in Albany.
WHEN CONGRESS PASSED THE TELECOM ACT in 1996, it played right into the hands of the state PUCs. In sec. 271, Congress set up a litmus test for the former Bell carriers seeking entry into long-distance calling. They must open their local area first and then prove to state regulators that they don't discriminate against competitors. Suddenly, the PUCs gained a measure of influence over national markets (and clout with its key client in all of this, the incumbent Bell carrier).
Of course, it remains to be seen whether the PUCs can call the shots in dictating the scope and pace of telephone competition. In a big case now pending at the FCC, the petition filed Sept. 29 by Bell Atlantic-New York for certification under sec. 271, the New York Public Service Commission has advised the FCC that local markets are open (at least enough to warrant entry into long-distance). The PSC has seen its recommendation opposed by the state's own attorney general, Eliot Spitzer, however.
On Oct. 19, when PSC chairman Maureen O. Helmer filed her agency's evaluation of Bell Atlantic's performance in opening local markets, she acknowledged that the Bell carrier had failed some of the 122 "metrics" used by the PSC and consultant KPMG to test the company's performance under the law's 14-point checklist, and that some parties would cite that failure in opposing certification. However, Helmer insisted that Bell Atlantic was "within striking distance" of the failed metrics.
"Because Bell Atlantic is not satisfying all of the 122 metrics found in its Performance Assurance Plan, we cannot say that its wholesale service is perfect,