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Fortnightly Magazine - January 15 2000

witnesses are dealing in mere speculation.

In fact, the hard evidence argues that markets love Edison. On Oct. 14, 1999, the Wall Street Journal ran a favorable story: "Edison International Reports 21 percent Rise in Earnings and Predicts Solid Growth." That followed a series of favorable financial reports from EIX CEO John Bryson. Two weeks earlier, on Oct. 1, Lehman Bros. had upgraded EIX stock to a "buy." Further, in late September, Duff & Phelps Credit Rating Co. had assigned an "A+" rating for certain EIX debt.

This case should provide a litmus test for Curt Hébert's argument that a utility faces higher investment risk when it retreats to a wires-only franchise. It offers the chance to make real policy - the sort of commitment that was missing from Order 2000. But it also revives Commissioner Stalon's old dilemma. Should a regulator sit as a trier of fact or make policy based on his presumed expertise? The reply briefs came in on the first of December. If the argument is valid that RTOs deserve a financial inventive, then here in this case it must carry the day. To prevail, Hébert must convince his colleagues to move beyond the evidence and make policy by intuition.


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