Fortnightly Magazine - January 1 1998

Unbundling, Take Two: No Effect on Risk

Robert Rosenberg in his comment on our paper makes a fundamental error regarding financial risk. (Rosenberg, "Unbundling Capital Costs: It Doesn't Add Up," Nov. 1, 1997, p. 46, responding to Maloney, McCormick, and Tyler, "The Wires Charge: Risk and Rates for the Regulated Distributor," Sept. 1, 1997, p. 26.)

Rosenberg claims that as utilities spin off into separate wires and generating businesses, risk will increase in both lines of business.

Retail Choice: A Race to the Bottom

A recent article laments the slow pace of retail competition for residential gas sales in New York ("Blue Flame Blues: Gas Pilots Sputter at Burnertip," Oct. 1, 1997, p. 22). Besides the meager financial incentive for a New York residential customer to switch gas companies, there is another factor contributing to the slow headway being made by gas marketers: The New York Public Service Commission failed to establish a level playing field with just and reasonable terms of sale.

ISOs: A Grid-by-Grid Comparison

BY THE START OF 1998, FOUR INDEPENDENT SYSTEM operators already were in operation and conditionally approved: ISO-NE, PJM and California by the FERC and Texas by the state PUC. Three more were either pending before the Federal Energy Regulatory Commission or expected to be filed in the coming months (New York, Midwest and IndeGO in the Northwest). Three additional efforts to develop ISO proposals were under way (DesertSTAR, MAPP and SPP). The Southeast is now the only large region of the contiguous United States without an ISO concept.