Erroll B. Davis, Jr.President & CEO
Wisconsin Power & Light Co.
Gas distribution will continue to be a monopoly for most customers and will continue to operate in the regulated environment. Thus, there is no direct threat from marketers and brokers for most of the distribution business.
With respect to the traditional merchant role of LDCs, current regulatory statutes ensure that most utilities find little money to be made in the merchant function. WP&L happens to be an exception because of the performance-based rates we implemented on January 1, 1995. There is nothing in the future that gives LDCs a lock on the merchant function within their jurisdictions, and those not in a position to profit from their merchant activity should probably seek to exit this role. Gross receipts taxes, utility taxes, and other vestiges of a prior regulatory regime must eventually wither and die away if true competition and attendant customer benefits are to be realized.
Although WP&L still maintains a merchant function within its gas business, we have also realized the difficulty of competing with independent brokers and merchants outside of the utility framework. To address this market, Heartland Energy Services, we formed an unregulated subsidiary, under WPL Holdings, Inc., our parent company. HES now offers both gas and electricity brokering services.
James A. Carrigg
Chairman, President, & CEO
New York State Electric & Gas Corp.