A five-year, performance-based regulation plan for New York Telephone Co. (NYT) has been signed by the New York State Public Service Commission staff and 15 other parties. The plan calls for NYT to improve service quality, reduce prices, and foster competition in its service territory. NYT agreed to relinquish its right to file for general rate increases, but in exchange will receive increased regulatory flexibility.

The plan was negotiated over a two-year period and the PSC will review it over the next several months.

The Oregon Court of Appeals has upheld rules implemented by state regulators requiring local exchange telephone carriers (LECs) to offer physical collocation to enhanced service providers. The court emphasized that the complaint brought by GTE Northwest Inc, an LEC, was limited to a "facial challenge" of the open network architecture (ONA) rules under state public utility law.

In setting utility conservation goals, the Florida Public Service Commission (PSC) has decided to permit the state's electric utilities to eliminate demand-side management (DSM) programs that increase rates for nonparticipating customers.

Gas local distribution companies (LDCs) in Wisconsin must provide unbundled balancing services for transportation customers at cost-based rates under new rules adopted by state regulators. The new rules came out of a Wisconsin Public Service Commission (PSC) investigation of LDC tariff changes required as a result of pipeline restructuring at the federal level.

The PSC ruled that balancing is required where an LDC is served by a pipeline with balancing provisions that contain penalties that default to the LDC, and hence to system sales customers.

The New York Public Service Commission (PSC) has turned down a request to create a special rate for backup service to qualifying facilities (QFs) with dispatchable contracts. The PSC made the ruling while reviewing a request by Niagara Mohawk Power Corp. for permission to increase its rates for backup services provided to customers with onsite generation, primarily QFs. The utility had withdrawn the proposed rates, but only after the parties to the case claimed that the rate proposal was designed to kill competition, especially from smaller QF projects.

The U.S. Court of Appeals for the District of Columbia Circuit has upheld a Federal Energy Regulatory Commission (FERC) finding that the municipal preference in hydropower project relicensing cases did not apply to "orphaned" facilities. Facilities are considered orphaned if the current license holder files a notice of intent to apply for a relicense, but then fails to file a timely application.

2 percent of California's gross state product. Competitively priced electricity is vital to California's $800-billion-a-year economy, one would think.

Vikram S. Budhraja

Vice President of Planning and Technology

Southern California Edison Co.

The transition to a competitive generation marketplace is underway. Customers want choices, flexibility, and competitive prices. Producers want open nondiscriminatory access to markets. Regulators want a smooth transition to the new system based on competitive efficiency, not cost-avoidance or cost-shifting among customer groups. And policymakers want a system that protects consumers without sacrificing environmental and energy policy objectives.

The debate over the merits of pool-based markets as opposed to reliance on bilateral transactions and the invisible hand of competition began without much care taken to define the details of the bilateral alternative. On closer examination, however, we find the two approaches have much in common, being more like different pews than different churches. A further debate that emphasizes only the few differences would not inform so much as distract from solving the common problems.

Retail wheeling has been repeatedly condemned by opponents who claim that it would cause rate discrimination between customer classes. They allege that it would unfairly reduce rates for large customers, while raising them for small ones. But discriminatory rate structures already result from the selective discounts that utilities grant their large customers.