[BETA] Fortnightly

THE ROAD TO RETAIL COMPETITION IS A LONG ONE. HAVING realized that, utility management has quelled its initial panic and has begun to concentrate on longer-term objectives. For instance, how much market share am I likely to lose during competition's early stages? And what prices can I charge to various customer classes without incurring a loss in market share?

The answer could affect decisions about future load, asset divestiture and competitive strategies.

IF COMPETITIVE ELECTRIC MARKETS PROMISE LEAN MARGINS and slim savings on commodity sales, then perhaps transmission and distribution companies could play a larger role in selling end-user services.

Yet low-risk T&D companies, building on their reputations as reliable providers, may need to grow to acquire the "critical mass" needed to make money selling services over delivery systems.

One of the few, if not only, businesses publicly betting on this strategy is the $4.1-billion GPU Inc. of Morristown, N.J. - and GPU means business.

PLANS OK'D for electric IOUs under New York's Competitive Opportunities docket.

CENTRAL HUDSON GAS & ELECTRIC CORP. RETAIL CHOICE: Offered to 8 percent of total load in 1998; additional 8 percent each year; choice for all by July 1, 2001. SAVINGS: $10.5 million to fund 5-percent rate cut for large industrials; all other rates frozen (since 1993) through June 30, 2001. Earmarks $24.5 million for incentives for residential, commercial and small industrial classes. Generation backout rate is highest among IOU restructuring plans.

THE MIDWEST INDEPENDENT SYSTEM OPERATOR PROposal raises the lingering question of whether the ISO model represents a "stepping stone" or a final form of electric industry transmission management. Many players are split on which model would best serve an open electric market: an ISO, or financial separation of the transmission and distribution system from electric generation.

Within the generalized ISO framework, individual members would retain ownership and operate and maintain transmission assets.

THE POWER PLANTS OF AT LEAST FIVE UTILITIES IN NEW England and California get swapped this year for more than $5.3 billion. And happily, those holding bonds on the plants will be given cash for their coupons.

These utilities (see sidebar, "Going Once, Going Twice¼ Sold!") can expect their credit ratings to remain firm or even jump (em although that's debated by analysts. Such improved ratings may surprise market observers led to believe that loss of utility collateral would hurt investment grades.

YEAR 2000. MILLENNIUM. DEREGULATION. Each word strikes fear into the heart of meter manufacturers and utilities alike. Like the turning of the century, deregulation is coming for the electric utility industry, and sooner than we think. How will it affect the metering industry?

The first real indication can be found in California. There, by order of the state public utilities commission, the customer's energy supplier (the energy service provider or the utility distribution company) will, for the time being, own the meter.

BY WHAT AUTHORITY CAN STATES FAVOR RENEWABLE

energy in a restructured electricity market?

Renewable resource funding marks a major point of contention in utility deregulation. Environmental groups fear that without some form of compulsion or subsidy, or both, renewable resources will not survive in an energy economy based on least direct consumer cost. However, utilities do not want to be saddled alone with the chore of carrying all renewables to market.

WHEN UTILITIES SAY THEY WILL "EXIT" THE generation business (em their stock in trade for the last 50 years (em what does that mean exactly? And what of those that plan to "concentrate" on transmission and distribution? Can you visualize a T&D utility? What would it look like? How many employees? How big a dividend? It's time to ponder these questions.

KCPL first with meters, automation; APS second for T&D management.

IF THE 1997 ULTRA COMPETITION CAN SERVE AS A GUIDE, then perhaps the forgotten "wires" business offers the next great opportunity for new applications in information technology.

That's the lesson of this year's contest, which saw Kansas City Power & Light Co., and Arizona Public Service Co. win the top two prizes. Each company gained recognition for IT applications designed in large part to modernize electric utility distribution systems.

AT Washington Water Power, Bobby Schmidt was appointed director of the company, and Paul A. Redmond announced his retirement as chair and CEO. Redmond started with the company in 1965. Previously, Schmidt worked as an independent trader in Chicago.

MDU Resources Group Inc. has promoted Martin A. White from senior vice president, corporate development to president and CEO. White, who has been with the company since 1991, will replace retiring president H.J. Mellen Jr.

Robert L. Goocher was promoted to president of AGL Resources Service Co. from executive vice president and COO.