Fortnightly Magazine - January 15 1997

How Technology Firms See Pay-As-You-Go Billing

More than just software, prepaid billing remakes the business.

It revamps operations and changes the customer relationship.

There are no technical impediments that stand in the way for prepayment meters in North America. Whatever roadblocks do exist lie more with the state legislatures and with the culture of gas utilities and consumers."

Those comments come from Janet Penz, product manager (diaphragm meters) for Schlumberger Industries, speaking from her new Canadian office in Mississaugua, Ontario.

PSC Disdains "Gradual" Reform in Consumers Power Settlement

The Michigan Public Service Commission (PSC) has approved a comprehensive settlement in a series of closely watched cases in which Consumers Power Co. had proposed to realign electric rates and cost recovery to anticipate retail competition in electricity.

Among other points, the settlement allows Consumers Power to implement a "direct access" tariff to meet anticipated competition for its largest customers.


On Monday, January 6, the Board of Trustees of the North American Electric Reliability Council (NERC) voted unanimously to require mandatory compliance from its regional and affiliate councils with all reliability "policies" adopted by NERC. Previously, the regional councils (MAPP, ERCOT, ECAR, etc.) were only required to give their "best efforts" to comply.

As the board explains, "Compliance with NERC rules needs to be insured, but peer pressure will not be sufficient."

This new vote stems from "A Call to Action," mailed out on October 28 by Richard J.

Vermont Issues Electric Restructuring Plan

Despite an acknowledged drop in rates (down 11 percent in real terms over the last ten years) the Vermont Public Service Board has proposed to restructure the state's electric utility industry. The proposal would follow along the same lines envisioned by many other states (em i.e., competition and choice in the generation sector, with regulated monopolies for transmission and distribution services, plus recovery of "legitimate" stranded costs.

Beginning in 1998, retail customers could choose among competitive suppliers.


American National Power announced three executive changes: Joseph E. Cofelice, senior v.p., was given the added post of COO; Jim Murray, senior v.p., was given additional duties of CFO; and David L. Coke, director-asset optimization, was promoted to operations v.p.

Peter W. Delaney, a cost-cutting commissioner in the New York Office of General Services, was appointed senior v.p.-business services at the New York Power Authority. The Authority also promoted Gerard V. Loughran, a principal attorney, to v.p.-human resources.

The Institute of Gas Technology (IGT) elected Roger A.

Water Utility Escapes Acquisition Adjustment

While approving the transfer of certain water utility assets and certificates between two utility companies, the Florida Public Service Commission (PSC) has decided against applying a negative acquisition adjustment to rate base in setting rates for the acquiring utility, even though the buyer paid "substantially less" than original cost for the facilities ($545,000 versus $2.845 million).

The PSC ruled that without extraordinary circumstances, its policy requires that a purchase of utility assets at a premium or discount should not affect the rate base calculation.


Wholesale power transactions continue to grow. During 1995, utilities spent more than $58 billion on bulk power and, for the first time, investor-owned utilities spent more for electricity ($30 billion) than for fuel ($29 billion) to generate it. The reasons for the expansion can be traced to more aggressive marketing strategies by electric utilities, an increasingly competitive group of independent power providers, and the presence of power marketers as a formidable and growing group of power traders.

Expansion in wholesale markets is hardly new.

Pa. Looks at Gas Marketers

In two recent actions concerning natural gas marketers and brokers, the Pennsylvania Public Utility Commission (PUC) has proposed new policy to define its authority over marketing by the state's local distribution companies (LDCs) and their affiliates, plus a new rule requiring LDCs to set tariffed guidelines to ensure that marketers and brokers possess the financial and technical fitness necessary "to meet their contractual obligations" in transporting gas through LDC systems.

It stressed that it would not permit unreasonable discrimination in retail offerings (em whether by the LDC


Southern Communications Services, Inc., which recently entered the wireless communications market, has begun to market products and services under the name of its parent, Southern Company. Southern also is parent to Alabama Power, Georgia Power, Gulf Power, Mississippi Power, and Savannah Electric.

Gulf Power, meanwhile, signed a contract with Scientific-Atlanta, Inc. for two-way energy management applications. Some 40,000 homes will be fitted with the interactive systems over eight years.

Study Points Out M&A Difficulties

Utilities that participate in a merger are just a likely to find revenues shrinking as growing, according to a recent study of completed and pending M&A activity among U.S. utility and energy companies.

The study, "Energy Utility Perspectives (em Creating Value Through Mergers and Acquisitions," conducted by Mercer Management Consulting, examines 43 completed and 53 pending U.S. utility deals conducted between 1985 and 1995.