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Fortnightly Magazine - March 1 1997

Real-Time Pricing-Restructuring's Big Bang

The electric industry hasn't seen so much upheaval since Thomas Edison threw the switch at the Pearl Street Station. Full retail access to competitive markets in generation and supply will challenge traditional ways of doing business. But no change will prove more dramatic for electric utilities than setting a competitive price (em that most fundamental of business decisions.

In anticipation of competition, utilities have been experimenting to discern what forms of the "product" (em electric power (em customers might want, and at what prices. One such experiment is real-time pricing.

Byline: 
Phil Hanser, Jose Wharton, and Peter Fox-Penner
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Minnesota Eyes Tax Issues Via Study

The Minnesota Department of Revenue and the Minnesota Department of Public Service have released a study finding that electric and natural gas utilities pay higher taxes in certain categories than in other states in the region, which could put Minnesota at a disadvantage as the utility industry becomes increasingly competitive.

The study, mandated by the 1996 state Legislature, finds that in addition to paying high real estate taxes, utilities also pay personal property taxes on machinery and equipment. However, in 1996, Gov.

Byline: 
Lori A. Burkhart
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Electric Utility Fails in Bid for Antitrust Immunity

The 9th U.S. Circuit Court of Appeals has ruled that Portland General Electric Co., could not invoke "state action immunity" as protection against antitrust charges in a case involving the division of the Portland, Ore., market into exclusive service territories.

Columbia Steel Casting Co., a large industrial consumer of electric power in the city, had sued Portland General and another local utility, Pacific Power & Light Co., charging both companies with dividing the city's electric users among them in violation of federal antitrust laws.

Byline: 
Phillip S. Cross
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Seven Myths of Real-Time Pricing

Myth 1. RTP increases the utility's costs and revenue requirements. %n1%n

Reality 1. A well-conceived RTP program reduces the utility's costs and revenue requirements.

RTP programs can reduce peak demands for power, increase off-peak demands, and reduce the need for additional peak-load capacity. This increase in efficiency can lead both to higher company profits and greater customer savings. As the electric industry becomes more competitive, these savings will flow to those customers most responsible for lowering the utility's costs.

Byline: 
Albert L. Danielsen & Nainish K. Gupta
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Perspective

Prospects look good for cheaper, independent electrical power in Ontario. The market is forcing an end to the current impasse on energy policy. Reforms are apt to include "wholesale access," which should arrive in the province before the year is out. Otherwise, Ontario may lose jobs to neighboring provinces and states.

Byline: 
Alexander J. Black
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Competition Moves N.Y. To Protect Core Gas Supply

Concerned that competition in the natural gas market might affect reliability of gas supply for core customers, the New York Public Service Commission has adopted new short-term curtailment procedures for the states natural gas local distribution companies.

According to the commission, the new procedures "recognize the restructured natural gas industry," and require that in the event of short-term interruptions or force majeure curtailment situations, the needs of core customers are met first.

Byline: 
Phillip S. Cross
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