The New York Mercantile Exchange (NYMEX) has asked the Commodity Futures Trading Commission (CFTC) to approve two applications for electricity options contracts, one based on each of the futures contracts already under consideration by the CFTC. (This past summer, NYMEX applied to offer trading in two electricity futures contracts, one for delivery at the California-Oregon border, and the other for delivery at the Palo Verde switchyard in Arizona.)

Except for delivery location, the terms of the two contracts are identical.

In a recent article ("The Efficient Utility: Labor, Capital, and Profit," Sept. 1, 1995), Taylor and Thompson attempt to measure the

economic efficiencies of 19 investor-owned utilities.

The authors use a method of efficiency measurement proposed by M.J. Farrell in a pioneering paper published nearly 40 years ago.

Thomas L. Yohe of Philadelphia Suburban Water Co. was appointed to the Cleanup Standards Scientific Advisory Board. The 13-member board is a new division of Pennsylvania's Department of Environmental Protection.

NorAm Energy Corp. has formed a new unregulated retail subsidiary, NorAm Energy Management (NEM), and appointed Rollie Bohall senior v.p. and COO. David Houghtby, formerly of Minnegasco, will be NEM v.p.

On Saturday, November 11, WPL Holdings, Inc. announced its three-way merger with IES Industries Inc. and Interstate Power Co. to form Interstate Energy. The very next day, in a full-page ad that ran in Milwaukee Journal-Sentinel, Madison Gas & Electric Co. launched its counteroffensive, featuring Boris the Pig.

"Hi (em I'm Big Boris," the ad begins. (The face of a handsome pig with a large snout stares back at the reader.) "My friends and I crave Radical Electric Deregulation.

In thinking about transmission pricing for a competitive electric industry, we should remember that the fundamental objective of competition is to increase economic efficiency. Improved economic efficiency, after all, leads to better use of resources, lower costs, and long-term benefits for consumers.

As the generation side of the electric industry becomes increasingly deregulated and transmission migrates toward common carrier status, an easily administered and fairly applied pricing system must be developed. The concepts of "postage stamp" tariffs and "contract paths" lose all logical viability. They possess no totally encompassing tie between the provider of the service and the revenues for that service.

By its Notice of Proposed Rulemaking on wholesale electric competition, commonly called the "Mega-NOPR" (or "Giga-NOPR"), the Federal Energy Regulatory Commission (FERC) has announced big plans for electric transmission.

The FERC would require "functional" unbundling of transmission from generation. The Mega-NOPR requires utilities that own transmission to file tariffs for point-to-point and network transmission services, based on guidelines in pro forma tariffs published by the FERC.

Bunker Hill. Gettysburg. Pearl Harbor. Iwo Jima. The Cold War. Each of these famous conflicts resonates in our history books. Despite the end of the Cold War, we may face another battle, this time between the Federal Energy Regulatory Commission (FERC) and the states over jurisdiction.

For the partners in a utility merger, the celebration must wait. After opening the most delicate of dialogues, and then negotiating the price and closing the deal, the merger partners must yet gain the approval of regulators. The application may lie sealed in its FedEx pouch, safely on its way to Washington.

Differences of opinion make for good horse races and bad jokes about economists, and those who are studying the recent wave of electric utility merger announcements have not let us down. Some of these economists optimistically believe that the mergers act as forces for competition, since they will combine corporate assets and staffs to bolster operating efficiency and market acumen at the merged companies. Other economists, who see transmission as the root of monopoly power, are more pessimistic.