Using Auctions to Jump-Start Competition and Short-Circuit Incumbent Market Power

Ohio's proposal for retail marketing areas would give all customers meaningful choice and all suppliers even footing.

When grocery shoppers go looking for a can of tuna fish, they must decide which brand to buy. No particular brand will jump off the shelf into their shopping carts. The same is true with automobiles or any other consumer good. First you choose a make and model. Electricity and other utilities, however, are a special case. In the transition from monopoly to competition, consumers face a different prospect.

Price Spike Redux: A Market Emerged, Remarkably Rational

The post-mortems on last summer's price spikes in the Midwest are in. At least three studies of the event diverge in their conclusions:

First, on Sept. 24 of last year, the staff of the Federal Energy Regulatory Commission found the root cause of the spikes in extreme weather and unexpected outages. It observed no direct evidence of market manipulation and concluded that the events were unlikely to recur.

Electric Restructuring Legislation: Handicapping the 106th Congress

Will inaction in the Senate and House prompt FERC to move ahead?

About 36 bills with the word "electric" in them were introduced in the 105th Congress. According to Capitol Hill and industry association staff, the 106th Congress, officially begun Jan. 6, appears likely to see fewer restructuring bills, but steadfast champions.

Likelier still are developments outside of Congress that will shape energy policy and perhaps beat legislators to the punch.

Off Peak

Consumers want one-stop shopping - everything in one package, and the telephone, too.

The role of the local electric utility could take on a much larger proportion if residential consumers and small business owners have their way.

These customers are increasingly interested in purchasing bundled products and services, according to a nationwide survey. And they're looking first to their local energy providers for additional services, even for products the suppliers have no experience providing, such as telecommunications.

News Analysis

Wholesale customer turns tables, threatens leveraged buyout against its own supplier.

Matanuska Electric Association, the largest customer of Alaska's Chugach Electric Association, has offered to acquire Chugach, the state's largest power company. But in launching the hostile takeover, Matanuska said it would pay not a cent to Chugach. Adding a new twist to the term "cooperative finance," the Matanuska co-op proposed a leveraged buy-out - a takeover strategy popular during the 1980s.

Mail

Author Spratley argues that Fortnightly's title misrepresents his December article.

In Fortnightly's Dec. 1 issue, I was surprised to see you place a new title on my article about how states are leveraging system benefit charges to finance new photovoltaic (PV) projects (originally "Consumer Charges Power Solar Financing"). Your provocative title: "Solar Mandate? Like it or not, Consumers Pay" implies that consumers are bearing an enormous burden for solar power imposed by state policymakers.

Perspective

Want auctions for gas capacity? Don't think pipeline. Think online.

In July 1998, the Federal Energy Regulatory Commission signaled its intent to try one more time to make greater use of electronic auctions in the pricing and allocation of regulated gas pipeline transmission capacity. The proposed rule, issued in Docket No. RM98-10, marks the third major effort by the commission in this area. Several workshops have already been held. Formal comments are due Jan. 22.

Benchmarks

During the past year, more than 35,000 megawatts of generating assets have been put to auction. Much analyst discussion has focused on the price and premium above book value these assets are commanding in the marketplace. An equally important issue is the new owners' plans for the assets. These plans provide significant insight on where generation markets are headed.

In nearly every sale, the new owners intend to add value to the plant by reducing operating costs.

People

Mary L. Schapiro, president and member of the board of the National Association of Securities Dealers Regulation Inc., or NASDR, was appointed to the Cinergy Corp. board of directors. Schapiro will fill the vacancy resulting from the retirement of Van P. Smith, chairman of Ontario Corp.

U.K. electricity regulator OFFER (Office of Electricity Regulation) appointed Brian Saunders, Ph.D., a member of the Electricity Pool, to head the Department of Trade and Industry/OFFER team to reform electricity trading.