[BETA] Fortnightly

Almost everyone in America has heard of Cal Ripken, Jr. But have you ever wondered what you and the utility industry have in common with him?There are at least three things. Let me tell you how I know.

On September 6, 1995, Cal Ripken broke Lou Gehrig's record of 2,130 consecutive baseball games played. I was privileged to attend that special game at Oriole Park at Camden Yards with my son Michael.

Entergy Corp. has hired John A. Brayman, former president of Ameritech Corp.'s telephone industry services subsidiary in Chicago. Brayman will continue company expansion into nonregulated, domestic energy, and utility-related business as executive v.p. of Entergy Enterprises, Inc. and president of an as-yet unnamed group.J. William Holden was named Southern Electric International's v.p. for operations and development in Latin America and the Caribbean.

GE Supply, a General Electric division, promoted William C. Betke to g.m.

In electric power, telecommunications, water, and natural gas, the costs of local distribution make up a significant share of the cost of providing services. For any network or system, the cost of distribution facilities is largely or entirely independent on usage; i.e., such costs are largely invariant to the number of phone calls, kilowatts, British thermal units (BTUs), or gallons that customers use.

The competitive transformations of the natural gas and telecommunications industries are over a decade in the making. By contrast, competition in the electricity industry is still emerging. Special interests have defeated many proposed competitive reforms. For example, in 1988 the FERC failed in its attempt to adopt regulations to encourage competitive bidding and independent power producers (IPPs).1 Similarly, decades of forceful industry opposition delayed open access in bulk-power markets.

In its recent Notice of Proposed Rulemaking (NOPR) on wholesale competition and open-access transmission,1 the Federal Energy Regulatory Commission (FERC) has outlined a plan to revolutionize the electricity industry.

The Federal Energy Regulatory Commission (FERC) has allowed an Oregon state court jurisdiction over a contract dispute between Portland General Electric Co. (PGE) and Southern California Edison Co. (SCE) (Docket No. EL94-92-000).In 1987, the FERC accepted a contract for PGE to sell SCE long-term system power and for a mutual exchange of capacity and energy. In 1994, SCE filed a complaint in Oregon state court, alleging that PGE had defaulted on the contract by closing the Trojan nuclear plant. SCE argued that its continued performance under the contract was excused.

"Green pricing," at typical rates of customer participation, could expand demand for renewable energy beyond current levels by more than an order of magnitude, pushing down production costs for energy resources preferred by environmental advocates. And just as important, that expanded demand would occur outside of the regulatory framework (em matching capacity to customer needs and wants.In practice, the utility asks customers to pay rate premiums to fund the production or purchase of renewable resources.

Everybody's talking about electric utilities dabbling in telecommunications. That's fine. But how about vice versa? Maybe what we've really got is telephone companies (and cable television, too) getting into energy. That's different.

The Federal Energy Regulatory Commission (FERC) has ruled that an Illinois statute did not require rates above avoided cost for wholesale sales by qualifying facilities (QFs), and so did not violate the Public Utility Regulatory Policies Act (PURPA) (Docket No. EL95-27-000).

The statute at issue requires a utility to buy power from qualifying solid-waste energy facilities at the utility's retail rate. But the statute includes an offsetting monthly tax credit, which prevents a utility from paying more than its avoided costs.

RETAIL DEREGULATION:

A TRANSFORMING EVENT

Retail sales of gas and electricity run about $300 billion a year. The deregulation of energy production, wholesale logistics, and bulk consumption has brought competition to about 40 to 45 percent of the value chain from wellhead and busbar to the retail meter.