The costs of providing telephone service to rural America are much higher than for more urban areas of the country. By definition, small rural subscribers are scattered throughout large geographic areas. In rural areas, the average number of subscribers per route mile runs about 6.3; the average number of subscribers per square mile is 4.4.
In electric power, telecommunications, water, and natural gas, the costs of local distribution make up a significant share of the cost of providing services. For any network or system, the cost of distribution facilities is largely or entirely independent on usage; i.e., such costs are largely invariant to the number of phone calls, kilowatts, British thermal units (BTUs), or gallons that customers use.
The Federal Energy Regulatory Commission (FERC) has set for hearing a request by Koch Gateway Pipeline Co. (KGP) to charge market-based rates for firm and interruptible natural gas transportation services (Docket No. RP95-362-000). First, however, the FERC must conclude Docket No. RM95-6-000, which will delineate the circumstances under which it may approve market-based rates.
The Federal Energy Regulatory Commission (FERC) has set for hearing a request by Koch Gateway Pipeline Co. (KGP) to charge market-based rates for firm and interruptible natural gas transportation services (Docket No. RP95-362-000). First, however, the FERC must conclude Docket No. RM95-6-000, which will delineate the circumstances under which it may approve market-based rates.
The Texas Public Utilities Commission (PUC) has issued its proposal for achieving electric transmission access and full wholesale competition (Project No. 14045).To achieve comparability, all utilities would be required to use their own transmission systems for all purposes at the same prices and under the same terms and conditions they apply to third-party transmission customers.
Is Too! Is Not!
In the August 1995 Mailbag, Mr. Michael Yokell claims our May 15, 1995, article ("It Ain't in There: The Cost of Capital Does Not Compensate for Stranded-cost Risk") "is simply wrong" and "nonsensical on its face" because we fail to distinguish between the cost of capital before and after the stranded-cost issue arose.
In fact, it is Mr.
Does the size of a company affect the rate of return it should earn? If smaller companies should earn a higher return than larger firms, then small utilities, because of their size, should be allowed to adjust the rates they charge to customers.By far the most notable and well-documented apparent anomaly in the stock market is the effect of company size on equity returns. The first study focusing on the impact that company size exerts on security returns was performed by Rolf W.
And wires in the air. Together they form the interstate natural gas pipelines and the electric transmission grid. When the talk turns to deregulation, whether on the gas or the electric side, the pipelines and the transmission grid are almost always voted "most likely to." That is, to remain regulated monopolies (em with cost-of-service rates protected by the Federal Energy Regulatory Commission (FERC).
Let's have a look at that idea.
The FERC has unbundled gas commodity sales from pipeline transportation.
The competitive transformations of the natural gas and telecommunications industries are over a decade in the making. By contrast, competition in the electricity industry is still emerging. Special interests have defeated many proposed competitive reforms. For example, in 1988 the FERC failed in its attempt to adopt regulations to encourage competitive bidding and independent power producers (IPPs).1 Similarly, decades of forceful industry opposition delayed open access in bulk-power markets.
In its recent Notice of Proposed Rulemaking (NOPR) on wholesale competition and open-access transmission,1 the Federal Energy Regulatory Commission (FERC) has outlined a plan to revolutionize the electricity industry.