Fortnightly Magazine - July 15 1995

NYNEX Gets Price Cap

The Massachusetts Department of Public Utilities (DPU) has completed a long-awaited rate plan for New England Telephone and Telegraph Co. (dba NYNEX), adopting price-cap regulation without earnings sharing, but with strong measures to protect ratepayers from monopoly pricing, investment risk, and subsidies of utility ventures. The plan also includes price floors and separates competitive and monopoly services for pricing purposes. The DPU also approved a rate freeze for basic residential service until 2001, but rejected a claim that rates should fall during that time.

Incentive Ratemaking in Illinois: The Transition to Competitive Markets

For the past several decades, utility regulation at the state level dealt with secure local markets and truly captive customers. A regulatory compact flourished that offered reasonable prices to customers, while guaranteeing the monopolist the opportunity to earn a fair rate of return on prudently incurred investments.

SEC Calls for PUHCA Repeal

The Securities and Exchange Commission's Division of Investment Management has proposed repeal of the Public Utility Holding Company Act of 1935 (PUHCA), with consumer safeguards preserved and transferred to the Federal Energy Regulatory Commission (FERC). Safeguards would include state access to holding company books and records, federal audit authority, and oversight of affiliate transactions.