Fortnightly Magazine - July 1 1998


Why am I not convinced that electric utilities really want to sell off their generating plants? A wires company--is that something to aspire to? Nobody likes to see wires strung every which way along the street. Isn't that why electric utilities call them telephone poles?

I hear utilities say that power production looks too risky. But is a wires-only strategy a retreat back into the womb of regulation?

If power companies expect rates for transmission and distribution to remain regulated, I'm a skeptic. One reason is what's happening with gas pipelines.

News Digest

TELEPHONE BILLING PRACTICES. Citing the filed-rate doctrine, which bars deviation from published tariffs, a federal appeals court affirmed the dismissal of two class action suits against AT&T Corp. that sought damages for alleged fraud. The suite arose from AT&T's failure to disclose to its residential long-distance telecommunications customers its practice of rounding charges up to the higher full minute.

News Analysis

POLITICS WON OVER PURPOSE AS AN EARLY VOTE on a nuclear waste bill in the U.S. Senate was itself laid to waste, apparently victim of a contested Senate seat in the state where spent fuel would be stored.

The June 2 vote would have limited debate on H.R. 1270. By getting a vote count, the leanings of senators on the bill would have been tested. And the way would have been paved for Senate Majority Leader Trent Lott (R-Miss.) to schedule a second, more formal vote on the measure.


THERE'S A STORM coming. This tempest threatens to inundate management and shred shareholder value. It can't be avoided, only survived. Only those who batten down the hatches will survive.

The issue is nuclear plant decommissioning. While many would prefer to comfort themselves that the dark clouds on the horizon are still far off, trouble may come sooner than they think.

Of the 106 operating plants in the United States, more than half were licensed before 1978. Of the plants that have shut down so far, not one has reached the expiration of its license period.

Off Peak

STARTING A NEW JOB CAN RESULT IN A FEW SURPRISES,but some new executives at electric utilities may be getting more than their share.

According to the Global Energy Utilities Practice, a Spencer Stuart study, electric utilities have been hiring droves of executives from outside industries (see Figure 1) to fill vice-presidential positions and above - only to lose their new recruits, often within a year.

By turning to other industries for new hires, utilities seek a shortcut on the road to competition, according to the study.

The IMO: Ontario's ISO Report Splits from Provincial White Paper on Grid Ownership, Transmission Pricing

SET UP in January by the Ontario Minister of Energy, Science and Technology, and led by Ronald J. Daniels, law faculty dean at the University of Toronto, the Market Design Committee issued its first interim report on March 31, presenting recommendations on two issues: (1) governance, operation and regulation of the Independent Market Operator, and (2) principles of market design.

IMO FUNCTIONS. The functions of the IMO were set out in November in the Ontario provincial white paper on electricity sector reform.

Redefining TVA The DOE Study - What Now?

LAST NOVEMBER, Energy Secretary Federico Peña asked the DOE

to study what to recommend about the Tennessee Valley Association in drafting proposed legislation on electric restructuring for the Clinton Administration. He referred the project to a committee of the Secretary of Energy Advisory Board, led by former South Carolina Congressman Butler Derrick.

The committee issued its report on March 31. The DOE had already released its legislative guidelines on March 25, six days earlier.

Saving BPA The NPPC Study - A 50 Percent Downsizing

HYDROELECTRIC POWER ENGINEERS might fare all right. But office

administrators could face staff reductions of up to 50 percent.

Such are the recommendations filed March 10 by the Cost Review Management Committee assigned to recommend measures to the Bonneville Power Administration for its own internal cost review.

BPA, TVA, Salt River: Playing Fair in Power Markets?

CROSS THE COUNTRY, CRITICISM RISES FROM INVESTOR-owned utilities as public power agencies are drawn into regional or national markets through power pools and the geographic expansion of power marketing activities. Whether these agencies are seen as federally funded or just indirectly subsidized, the complaints remain the same: tax advantages, no reciprocity, exemptions from regulation.

Who really has power over the power? Do public power agencies enjoy an advantage, as private industry claims?