The pending merger of El Paso Electric Co. (EPE) and Central and South West Services, Inc. (CSW) keeps going and going and going. But the issue of "comparability" has yet to be left in the dust. And so another landmark case looms large, giving the Federal Energy Regulatory Commission (FERC) another opportunity to shape future wheeling and merger transactions.
Fortnightly Magazine - March 1 1995
Republican members of the Senate Commerce Committee have released an outline of draft telecommunications legislation that would remove all state or local barriers to entry for telecommunications service. The legislation would allow any regional Bell operating company (RBOC) to apply to the Federal Communications Commission (FCC) to offer interexchange services (em subject to generic safeguards, such as a separate subsidiary requirement. If the FCC certifies that interconnection/opening requirements have been satisfied, the RBOC request must be granted.
Electric utilities are informationally dysfunctional. When we surveyed electric utility managers from around the country, we found a general consensus: Individual employees may possess vital information, but typically they do not know what to do with it. They don't understand why it's important or who may need it.
Commissioner Donald F. Santa, Jr., offered the Federal Energy Regulatory Commission's (FERC's) view of the "New Power Industry" at the 3rd annual electricity conference sponsored by the Western Energy and Communications Association and the Los Angeles Power Producers Association in Irvine, CA. Santa acknowledged current trends toward disaggregation, but said he doubted that a single, uniform, nationwide industry structure would emerge.
Financial models within the utility industry are changing rapidly. Driven by competition, deregulation, and shareholder concern ov er profitability, North America's intermediate and larger-sized electric and gas companies are looking more closely at information technology (IT) investments.
On December 12, 1994, Craven Crowell, chairman of the board of the Tennessee Valley Authority (TVA), issued two well-publicized announcements. First, TVA would not finish three of the nuclear units it has had under construction since the 1970s, unless it could find partners willing to share their construction costs (a prospect he subsequently characterized as "very slim,").1 Second, TVA planned to set an internal cap on its total debt at a level $2 to $3 billion below the $30-billion limit imposed by the Congress.
For the last eight years of my 27-year career in the military, I was responsible for merging the Air Force's computer business with its communications business. This undertaking was similar in at least one significant way to current efforts to expand the role of computers in the regulated utility environment (em education is paramount.
Utilities typically employ computer technology either by creating internal information management divisions/subsidiaries or by outsourcing the work to a company that specializes in computer information technology.
How risky are utility investments today? Regulators have always faced this question when setting the return component of rates under traditional rate base/rate of return regulation. With major industry restructuring looming, risk issues have become proportionately more important and complex. California regulators, for example, have increased the return for the state's electric utilities to account for investor worries over the pace of restructuring in the "Blue Book" proceeding.
California, Oregon, and Nevada have developed a regional response to pricing transparency.
The electric utility industry has turned the corner away from monopoly regulation and into the competitive marketplace. No big surprise. Since the late 1970s, consumers have faced increasing sticker shock. In addition, customers want the same choices over electricity purchases that they have with other products.
The U.S. Court of Appeals for the Seventh Circuit has struck down as unconstitutional Illinois' 1991 Coal Act, which required state utility regulators to develop pollution control plans aimed at maximizing the use of high-sulfur coal mined in the state. The Act also allowed scrubber costs associated with the use of high-sulfur coal to be passed through to ratepayers.