After a year and two task forces, the National Association of Regulatory Utility Commissioners (NARUC) could soon have a new structure.
"With all these industry changes, we need to look internally, as commissions are also being asked to change, to see what changes will compliment what's happening out there in the industry," says John Gawronski, NARUC spokesman.
Flexible pricing schemes generally fall into four categories:
Load Retention Rates. Can prevent a customer from exiting system, either by relocating or choosing to self-generate. If retail competition is allowed, load retention rates can prevent customers from choosing a different generation company.
Economic Development Rates. May attract new customers to a service territory, or encourage existing customers to expand operations and boost demand. Differ from load retention rates by purporting to create jobs.
Flexible Rates (Flexrates).
Objective. Estimate market impacts of "1+" dialing parity plus eliminating traditional LATA boundary.
Model. Measure shifts in market dominance between major competitors, by assuming price changes and estimating revenue impacts across range of demand elasticities, to reflect both changed rates and market shares. Also consider changes to revenues collected by U S WEST through carrier access charge (CAC).
Scope. Limited to residential toll calls carried by AT&T and U S WEST. Does not examine commercial toll customers.
Data.
Now that incumbent LECs must offer all services for resale, state regulators must decide the appropriate level of discount for the new resale tariffs.
Discounts could put incumbent LECs at a disadvantage, since many local exchanges already price below the cost of service, particularly for basic residential access.
Quizzed by lawmakers, and buffeted by political winds, regulators ponder an uncertain future.
Agree or not, utility commissioners are part judge, part regulator, and part politician.
With competition looming, electric utilities increasingly resort to price discounts, both to retain customers and to alleviate some of the pressure to introduce retail competition. Performance-based ratemaking (PBR), which allows utilities greater flexibility in offering price discounts, is emerging as an integral component of many restructuring proposals.
However, flexible pricing can create inequity among ratepayers.
By Michael H. Lee and William A. RosquistThe Vanishing LATA:
Pricing Chasms
and Clashing Markets
for Toll Service
Wide disparities can occur in toll rates within some states (em a legacy of multiple LATAs. Now, with
barriers falling, where will prices go?
LEASING THE LOOP:
Telephone Service Resale in the Local ExchangeResellers want steep discounts, but local rates don't always cover costs. And reselling local lines provides little incentive
to upgrade the network.The Telecommunications Act of 1996 (Act) compels local exchange carriers (LECs) to sell telephone service to competitors (em who would then resell to the public at retail. Instead of constructing their own local distribution networks, competitors would buy local telephone service from the existing carrier at discounted rates.
A few utility executives claim to sleep untroubled by the future of their companies. Most, however, admit to some tossing and turning engendered by concern over competition and the complacency of coworkers.
What, if anything, are they doing about it?
A survey of 117 PUBLIC UTILITIES FORTNIGHTLY subscribers reveals that American utility executives are asking themselves all the tough questions about the future of their operations. It also reveals a widespread sense of urgency in the search for answers.
The Montana Public Service Commission (PSC) has authorized Montana-Dakota Utilities Co., a natural gas local distribution company (LDC), to increase rates by $1.008 million. The increase includes an allowance for return on common equity of 12 percent. The PSC permitted the new rates to enable the LDC to recover the entire nongas cost increase from the residential customer class. It refused, however, to approve rate rebalancing to shift an additional $1.5 million of revenue requirement to the residential class without a thorough study of both gas and nongas costs.