If Jane Austen were writing this column, she would begin something like this: "It is a truth university acknowledged, that a natural gas distributor in possession of a good franchise must be in want of an electric utility to merge with."
That's the rule of electric/gas convergence. But as an editor, my instinct when I uncover such a "rule" tell me to look for a reason why it ain't so. That's why I got such a kick from a recent conversation with Sheldon Silver, the speaker of the New York State Assembly. Silver has opposed efforts by Governor Pataki to guarantee that electric utilities can recover any costs left stranded by competition. He spent a few minutes with me to explain why New York instead should focus on customer choice and cutting electric rates. But along the way he also gave me as good a reason as I've heard yet to oppose the idea allowing electric and natural gas utilities to merge their business.
"One of the ideas that should be considered," said Silver, "is separating natural gas and electric assets.
"While there is some synergy to be gained by combining ... competition might be best achieved by separating gas and electric companies, the same way some would separate electric generation, transmission and distribution."
I asked Silver about the proposed merger between Brooklyn Union Gas and Long Island Lighting Co., and gas/electric mergers in general:
"I do acknowledge certain synergies in cost savings, but in areas like Long Island, where the ability to compete in generation is limited, competition between different forms of energy may be significant in keeping rates low."
Gambling on the Spot