The prospect of deregulation has induced a wave of mergers among electric utilities. Most of these mergers would fail an antitrust review because, by combining generation assets of interconnected utilities, they have substantially reduced potential competition in generation.
Fortnightly Magazine - June 1 1996
Stranded investment is mostly intrastate.
Let the states work free of uncertainty.
Recent activity in both chambers of the U. S. Congress shows federal lawmakers seeking to help the electric industry move toward competition. More than likely, election-year politics will stand in the way. Even so, Congress can go one better: It can step aside and let the states lead the way.
The greatest concern lies in stranded costs (em utility assets and obligations valued on company books at above-market levels.
April 23, 1996
On behalf of our members, we want to express our continuing appreciation for the leadership you and your colleagues are showing in seeking enactment of S. 1317, a bill to repeal the Public Utility Holding Company Act of 1935, while assuring appropriate consumer and investor protection. As you know, the '35 Act imposes duplicative, unnecessary, and burdensome requirements that are outdated and do not reflect current circumstances in the gas and electric utility industry.
In an article entitled "Rate Unbundling: Are We There Yet?" (PUBLIC UTILITIES FORTNIGHTLY, Feb. 15, 1996, p. 30), authors Susan Stratton Morse, Meg Meal, and Melissa Lavinson urge regulators to unbundle the cost of capital to recognize that the business risk of electric generation exceeds that of transmission and distribution (T&D).
El Paso Natural Gas Co. (EPNG) has filed a settlement at the Federal Energy Regulatory Commission (FERC) that resolves its general rate case with natural gas pipeline customers such as Southern California Gas Co. (SCG) as well as the question of who pays for unsubscribed capacity.
Months of confidential negotiations resulted in agreements with 95 percent of EPNG's customers, and with the California, Nevada, and Arizona commissions.
So the Federal Energy Regulatory Commission (FERC) won't break up the electric utility industry. But it may happen anyway (em if not at the FERC's direction, then perhaps under pressure from state regulators who, some say, are threatening to link stranded-cost recovery to vertical disaggregation.
What would a breakup mean for bonds and bondholders?
As we reported last month ("New Corporate Structures Place Bondholders at Risk," May 1, 1996, p.
Charles B. Curtis, deputy secretary of the U.S. Department of Energy, spoke on the world energy balance and its impact on U.S. markets at the American Gas Association (A.G.A.) Natural Gas Roundtable on April 2 in Washington, DC. Curtis pointed out the security implications of the latest Energy Information Administration (EIA) forecast that global demand for oil might reach an additional 20 million barrels a day by 2010, and that the Persian Gulf would likely supply 75 percent of that demand.
ManagementDeregulation isn't just for utilities anymore.
This year, PUBLIC UTILITIES FORTNIGHTLY'S
annual Electric Executive's Forum recognizes
the growing constituency of the electric
The City of Palm Springs, CA, has asked the Federal Energy Regulatory Commission (FERC) to approve a plan allowing it to enter the electric business by installing a second electric meter at customer locations.
s Cherry Picking
"If we ignore history, we're doomed to repeat it. And what happened in the natural gas industry is precisely what will happen. The FERC authorized deregulation of the natural gas industry and, as a consequence, today's retail consumers (em meaning residential retail consumers (em are paying more than twice as much for natural gas as the large industrial users.