When Niagara Mohawk Power Corp. announced its competitive restructuring plan on October 6, 1995, it broke ranks with what had been a curiously united front against competition. The opposition had learned to genuflect before the altar of competition, but then fight doggedly to keep markets closed. This united front had implied that competition would produce largely the same impact on all utilities, but that is not true. Competition offers lucrative long-term opportunities for some utilities and potential disaster for others. These differences suggest a wide diversity (em not unanimity (em in the positions that utility managements should take with respect to competition.
At some point, the growth of competition will force utilities to compete head-to-head against each other and against third parties as power producers and power marketers. Preparing for battle is now the top priority of utility managements, and the associated cost-cutting can be expected to produce substantial changes in relative competitive position among different utilities.
The position of a particular utility at the time competition begins in earnest will depend on three factors:
s A utility's present position. Costs and financial resources in 1995 will reflect past decisions and events, and will add up to a net asset or liability. If the utility carries low, per-unit operation and maintenance costs and no overcapitalized generating facilities, its present position will obviously offer some advantage. But if the company is burdened by operating inefficiencies and high-cost nuclear plants, its situation will present a distinct disadvantage.