Southern Company

ON OCT. 31, 1997, ENTERGY CORP. AND 16 OTHER MEMBERS

announced their intention to withdraw from the Southwest Power Pool regional reliability council and join the neighboring Southeastern Electric Reliability Council. The announcement shocked the SPP and its members, plus other industry observers and stakeholders.

While significant in number, the withdrawals do not necessarily signal widespread displeasure with SPP's initiatives and performance.

In aiming to make financial statements more meaningful, will FASB instead make them indecipherable?

By mid-summer, a total of 123 companies had cranked out some 574 pages of comments, detailing exactly what they thought of the accounting rules proposed by the Financial Accounting Standards Board to cover the closure or removal of certain long-lived assets. %n1%n The FASB's"Exposure Draft," issued early last year, had requested comments on eight issues. The respondents answered as requested, but also raised a host of new questions.

OTAG Makes Recommendations to EPA

Does cleaner air mean lighter pockets?

The Ozone Transport Advisory Group has recommended that the EPA should let states adopt a range of emissions levels to help meet ozone standards, which could tap into utilities' profits. The proposal comes two years after OTAG was formed to study region-to-region airborne movements of smog, a byproduct of ozone.

Coal-fired power plants and vehicle exhaust are the biggest contributors to ozone, due to emissions of nitrogen oxides and volatile organic compounds.

Moody's on May 14 said it would maintain a negative outlook on The Southern Company's Prime-1 short-term rating for commercial paper following The Southern Company's announcement that it will acquire a 25-percent ownership interest in Berliner Kraft und Licht AG (Bewag), an electric distribution company in Berlin.

Southern will purchase a 25-percent share for $830 million, pending approval by Berlin's parliament and European regulators. A recently established consortium, consisting of Southern Co.

Liberalisation of the electricity markets in the UK and Scandinavia has driven merger activity in these territories. This was evident in 1996 with U.S. companies taking over MEB, East Midlands Electricity and Northern Electric, with London Electricity likely to follow in early 1997.

A Georgia-based consumer advocacy group, the Campaign for a Prosperous Georgia (CPG), has asked the Securities and Exchange Commission to halt a move by The Southern Company to use up to 100 percent of its retained earnings for a $2.75 billion acquisition of 80 percent of the Asian utility company, Consolidated Electric Power of Asia.

Among other claims, CPG wants the SEC to reconsider an April 1996 decision that granted an exemption to The Southern Company from the provisions of the Public Utility Holding Company Act (PUHCA).

Worries in Congress.

Southern Communications Services, Inc., which recently entered the wireless communications market, has begun to market products and services under the name of its parent, Southern Company. Southern also is parent to Alabama Power, Georgia Power, Gulf Power, Mississippi Power, and Savannah Electric.

Gulf Power, meanwhile, signed a contract with Scientific-Atlanta, Inc. for two-way energy management applications. Some 40,000 homes will be fitted with the interactive systems over eight years.

Incumbent monopolists won't command high premiums

if newcomers can rebuild capacity from scratch at a cheaper price.

At first glance, many of the nation's regional markets for wholesale electric generation appear monopolistic. In some of the 18 regional power markets we have identified, the leading companies account for 75 to 90 percent of the area's generating assets. In other markets, where the concentration problem does not yet seem as pressing, mergers and acquisitions threaten to raise levels of concentration of ownership in generation.

Load Aggregation:

The Wolf at the Door?

Of course, there's nothing to stop a utility from aggregating its own customers.

WHAT, EXACTLY, IS LOAD "AGGREGATION?" Is it a threat, an opportunity, or merely a sales tactic?

Actions taken in California, as well as in pilot programs across the country, place customer aggregation on the leading edge of efforts to pull native load from electric utilities.

Ironically, present-day utilities already "aggregate" their customers (em albeit into a single group.

Richard J. Grossi, chairman and CEO of United Illuminating Co., has been elected chairman of the North American Reliability Council. Grossi will serve a two-year term.

Thomas L. Fisher, president and CEO of Northern Illinois Gas Co. has been elected chairman of the Gas Research Institute's board of directors. Fisher will serve a one-year term, along with newly elected vice chairman, John F. Riordan, president and CEO of MidCon Corp.

Chairman Thomas G.