Regulation

Retail competition will render a substantial fraction of existing electric utility plant worthless. Some estimates are so large that the question of compensation for these so-called "stranded investments" overshadows debate on the value of retail competition. Advocates of compensation frequently appeal to a "regulatory compact." They claim that this compact justifies compensation for utilities on grounds of fairness. The case for fairness, however, is badly flawed. Moreover, compensation may adversely affect the efficiency of markets in which competition is emerging.

The electric power industry lies in the midst of major change, including a shift to market-based wholesale prices. Market players and regulators will recognize that competition requires a shift in thinking on key issues such as resource planning before the market is developed enough to provide adequate price information.

Despite all the talk, despite keen interest in certain industry sectors, and despite federal legislation, increased competition in the electric power industry is far from certain. Unlike other deregulated industries, electric power is primarily regulated by state public utility commissions (PUCs) (em not by a federal regulatory agency. The debate over the values and benefits of competition as opposed to regulation will have to take place over and over again.

Charles B. Yulish was named v.p., corporate communications, for the U.S. Enrichment Corp. Yulish previously was executive v.p. and managing director of the E. Bruce Harrison Co. He began his career with the U.S. Atomic Energy Commission.

Dan Bart was promoted to the new position of v.p., standards and technology, to serve both the Electronic Industries Association and the Telecommunications Industry Association. Bart will retain his current responsibilities with TIA.

Allen Arvig, president of East Otter Tail Telephone Co.

During the last decade, the natural gas industry in the United States has been transformed from a heavily regulated business to one facing competitive markets. This transformation grew out of the failure of regulation; regulators, suppliers, pipelines, and customers all played a part. It continues today as the industry restructures and builds new institutions.A series of regulatory crises forced deregulation in stages: First, wellhead prices; second, gas contracts; and finally, pipeline transportation.

The Southern Company named A.W. (Bill) Dahlberg chairman and CEO in addition to his current duties as president. He succeeds Edward L. Addison, 65, who is retiring after 12 years as CEO and more than 40 years with the company. Dahlberg, 54, served as president since January 1, 1994. He began his career with The Southern Company at age 19 when he joined Georgia Power, a subsidiary, as a meter installer.

Ralph Johnson was named v.p., power resources, for the Texas-New Mexico Power Co.

The process of determining how to implement utility competition is often cast as a struggle between two opposing camps: shareholders and ratepayers. There are, of course, two other major players, managements and regulators. The bipolar view tacitly assumes that shareholder and management interests coincide, and that regulators have customer interests at heart. Neither assumption is altogether valid. Shareholder interests deviate from management interests in important ways, just as the interests of the entrenched regulatory bureaucracy diverge from the public interest.

You can look at the title in two ways: (a) "The sky is falling," or (b) "There's nothing new under the sun." But both views are wrong. Let me explain.

No one doubts that state public utility commissions (PUCs) must change. But we need not throw up our hands in despair or smile and pretend we've seen it all before. Yes, PUCs have seen major changes before. The 1930s expanded PUC authority from an advisory, sunshine role to serious oversight.

Our industry stands at the threshold of significant change. Competitive forces and significant technological advances beckon the nation's electric utilities to step forward. The electric industry has the opportunity to create a future that provides the benefits of competition to all customer groups. If we don't restructure, someone else will do it for us.

In the United States, the Federal Energy Regulatory Commission (FERC) has undertaken the task of guiding the electric power industry from regulation to competition. But unless the FERC develops a plan to consider all facets of electric deregulation at the same time, we may end up driving on the wrong side of the road.

Last October the FERC issued its policy statement on electric transmission pricing. See, Inquiry Concern. Pricing Policy for Trans. Servs.