Privatizing the grid doesn't appear to have hurt the United Kingdom any. Quite the contrary. When it comes to electricity, at least, Britannia still rules to some extent.

Industrial prices in the United Kingdom continue to be among the most competitive in the world, according to an Electricity Association (EA) survey. Industrial contract prices are now 49 percent cheaper than in Japan, and 41 percent less than in Germany. Average prices in Italy, Spain, and the United States are also more expensive.

The New York Public Service Commission (PSC) has approved its first market-indexed incentive mechanism to encourage a local distribution company (LDC) to control gas-supply costs. Brooklyn Union Gas Co.'s modified proposal for a one-year pilot incentive mechanism employs an external index as a gas-cost target (the monthly closing natural gas contract price on the New York Mercantile Exchange), rather than a series of internal cost measures based on estimated fixed and variable costs.

Having committed to employing competition in the telecommunications local exchange carrier (LEC) market to elicit the broadest range of service offerings while ensuring fair rates, state commissions are now establishing regulations to put the new policies into effect. Current investigations focus on the proper costing and rate-setting methods for interconnection and transport services among newly competing carriers.

As regulators continue to investigate industrywide restructuring as an answer to regional electric rate disparities and calls from large consumers for price reductions, the trend of dealing with the problem through rate discounting also remains strong. Regulators have taken steps to ensure that shareholders bear at least some of the risk for revenue shortfalls that might result under the new contracts.

Merger Menace: Holding Companies and Overcapitalization

States remain as powerless to control holding companies as they were

in 1935, when PUHCA was passed.

During the 1970s and 1980s, diversification swept the gas and electric utility industries. One byproduct of this craze was the formation of a large number of new public utility holding companies, exempt not only from regulation by the Securities and Exchange Commission (SEC), but from state regulation over security issues.

The United States Enrichment Corp. (USEC), after consulting with the U.S. Treasury Department, has selected investment bankers for its proposed privatization. The Energy Policy Act of 1992 called for USEC to prepare two paths to privatization: an IPO and a negotiated mergers and acquisition transaction with a third party. USEC supplies 86 percent of the domestic uranium enrichment market, and 37 percent of the world market.

Based on competitive bidding, Morgan Stanley & Co., Inc. has been chosen as transaction manager.

The Nuclear Regulatory Commission (NRC) has authorized the Tennessee Valley Authority (TVA) to load fuel and perform low-power testing of the Watts Bar nuclear plant. The low-power license will allow the 1,160-megawatt Unit 1 to operate at 5 percent of capacity. The license verifies that Watts Bar construction is complete, and that all safety and environmental requirements have been met. A license to operate at full power may be granted once the fuel loading and low-power testing is complete. Commercial operation is anticipated for spring 1996.

On November 8, the Federal Energy Regulatory Commission (FERC) approved a major rate settlement on pipeline corrosion issues for the owners of the Trans Alaska Pipeline Systems (TAPS), based on a November 1994 agreement in principle among the parties. The settlement results from an alternate dispute resolution (ADR) technique that employed a mini-trial and involved high-level representatives for all parties.

The Federal Energy Regulatory Commission (FERC) has accepted proposed open-access, point-to-point, and network transmission service tariffs filed by Tampa Electric Co. (TE), effective November 14 (Docket No. ER95-1775-000) and subject to the outcome of its open-access Notice of Proposed Rulemaking (mega-NOPR) proceeding. TE says the tariffs substantially conform to the pro forma tariffs proposed under the mega-NOPR, and were calculated using the methods outlined there.

Finding that Enron Storage Co. lacks market power, the Federal Energy Regulatory Commission (FERC) has approved its request for market-based storage rates for firm and interruptible natural gas service under section 311 of the Natural Gas Policy Act of 1978, subject to conditions (Docket No. PR94-2-000). Enron proposed that rates for individual storage services be determined by the marketplace and agreed to by itself and the customer through arm's-length negotiations.