but outsourcers could be cutting in.Wholesale competition and the prospect of competitive retailing are leading many electric utilities to turn their distribution activities into discrete business units. But the emergence of the "DisCo" as a distinct entity may only mark the first step in a more radical disaggregation.

Why the distribution business may see radical change isn't immediately apparent.

The spectre of retail competition in electricity presents some difficult but solvable technical problems in creating new markets. It could lead to a new world of regulation. At the least, it will expose some currently protected utilities to potential losses that could prove substantial.

This prospect of losses has inspired some high-cost utilities to mount a formidable defense of the status quo, coupled with an aggressive offense to shape the transition.

Utilities in the Western Systems Coordinating Council, especially those in Arizona, found out last summer what it's like when 600,000 consumers lose power. This event, however, was just a warmup for the fireworks that followed and then promptly fizzled.

The outage prompted a series of highly publicized letters between Arizona's Republican Gov. Fife Symington and Renz Jennings, the Democratic chairman of the Arizona Corporation Commission (ACC), which has been investigating retail electric competition since 1994.

The Georgia Public Service Commission (PSC) has approved its first negotiated contract for discounted electric rates under an economic development incentive plan adopted in 1994.

Georgia Power Co. filed the contract in May after Olin Corp. announced it would relocate 100 manufacturing jobs to Tennessee unless the company could negotiate power rates.

Boston Edison Co. (BE) and RCN Inc., a subsidiary of C-TEC Corp., have announced what they say is the "most comprehensive agreement in the nation" between an electric utility and a broadband network company to provide one-stop shopping for energy and telecommunications services.

The two companies have signed an agreement to form a joint venture to provide local- and long-distance telephone service, video, high-speed internet access, and eventually, energy-management and property-monitoring services.

American International Partners, L.C. will conduct a feasibility study for a 100-Mw, coal-fired power plant in the northern border region of Vietnam. The proposed project is estimated at $150 million, which includes expansion of a coal mine on the site and development of a limestone mine. The project would be developed jointly with The Vietnam National Coal Corp. The two companies have signed a letter of intent to develop a second plant in the Bac Thai province, 70 kilometers from Hanoi.

CalEnergy Co., Inc.

Un-American Activities

I would like to comment on Joseph Paquette's letter ("Stranded-cost Recovery: It's Constitutional," Mailbag, Oct. 1, 1996) responding to Charles Studness (Stranded-cost Recovery: It's Un-American," Financial News, July 15, 1996, p. 43).

Mr. Paquette suggests that denying recovery of stranded costs amounts to an unconstitutional taking of private property.

John L. Carter was elected to Tucson Electric Power Co.'s board of directors. He replaces J. Burgess Winter, who resigned. Carter recently retired as executive v.p. and CFO of Burr-Brown Corp.

Madison Gas and Electric Co. promoted Terry A. Hanson to v.p. and treasurer. Hanson, who joined the company in 1981, had been treasurer.

Connecticut Natural Gas Corp. promoted two executives and hired a third.

It was the week before Thanksgiving. On the train ride home (I live in downtown Washington, DC, in an old, sprawling apartment building that once claimed Huey Long and Richard Nixon as tenants), my attention was drawn to a frazzled female lawyer sitting in the seat next to me, who was feverishly making notes in the margins of a thick, serious-looking, legal-sized document.

I confess. I like to read over people's shoulders, but often lose interest after the first few words. This case was different, though.

Utilities Shut Out of Third-quarter Stock Upswing

Utility stocks treaded water during the third quarter, while most stocks nationally took flight. This lackluster quarterly performance in the utilities sector proved most prevalent in the Public Utilities Stock Index. The box score: Our index fell 43.96 points, or 1.11 percent, to conclude the three-month period at 3908.43.

In stark contrast, the Dow Jones Industrial Average powered itself 227.54 points higher, or 4.02 percent, en route to a record high of 5882.17.