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Commission Watch

While electric restructuring pauses, telecom pushes forward.
Fortnightly Magazine - February 15 2003

are seeing the greatest savings rely primarily on competitive service providers that rely on the so-called "unbundled network element platform," or UNE-P.

Late last year the Kansas State Corporation Commission sent a letter to its congressional delegation in Washington, D.C., expressing disagreement with the argument that the pricing of LEC unbundled network elements is the root cause of the financial crisis in the telecommunications industry. The commission noted that Southwestern Bell Telephone Co., the regional dominant LEC, had reduced some of its UNE-P rates on its own initiative in connection with its application to begin providing long-distance telephone service in Kansas. The commission also pointed out that the Bell operating companies currently are not entering each other's local service markets. The commission asked why, if the network services are priced too low, the Bells weren't seeking to take advantage of the situation.

The Pennsylvania PUC, known for its advocacy of electric restructuring, recently began promoting its success in developing a competitive market for local telephone service in that state.

A multimedia grassroots campaign to educate Pennsylvanians about local telephone competition has driven more than 5 million hits to the "utility choice" Web site ( www.utilitychoice.org), which allows consumers to type in their area codes and exchanges (the first three digits of their telephone number) to view and compare local telephone service providers, plans, and prices in a convenient side-by-side list. The site provides shopping information for electric and natural gas consumers. According to the PUC, there are about 250 companies certified to provide local telephone service in Pennsylvania; approximately 40 of these competitors offer residential local service.

Oregon Consumers Doubt Restructuring

An evaluation of the competitive power market for residential service conducted by the Oregon PUC indicates that now is not the time to proceed with further deregulation of the electric industry in that state. The state PUC said that there was little evidence of competition, and it could not determine how well it might work from a consumer perspective, even for the largest customers. Utility-sponsored rate options, including market-based pricing and time-of-use programs, currently provide some of the benefits expected from a fully functioning competitive market, the PUC concluded.

According to the PUC market report, consumers in Oregon are not enthusiastic about having energy options. A survey conducted by a professional market research firm found that participants fear that the introduction of new electricity options would lead to problems similar to those they have already experienced with telephone companies, such as hidden charges, unreliable service, and aggressive phone solicitations. The PUC also emphasized that residential consumers are not knowledgeable about energy procurement, making consumer protection and public education efforts a vital concern. It said that some of the problems already seen in the telephone market might be worse from the consumer standpoint because electric use is less discretionary.

The PUC report found:

  • There likely would be few, if any, power suppliers competing for residential consumers;
  • The cost of implementing a competitive market for residential consumers exceeds the likely benefits;
  • Competitive power markets for residential consumers have not been in place