To what extent should regulation yield to market forces in setting wholesale electric prices? The Federal Energy Regulatory Commission (FERC) posed this question when it sought comments on whether open transmission access would eliminate the need for anything like traditional rate regulation.
Speaking last fall in New York City, Rep. John D. Dingell (D-MI), the ranking Democratic leader of the House Commerce Committee, questioned the need for federal legislation on electric utility restructuring, and even warned the audience that passage of any federal legislation in the 105th Congress to require electric competition was far from guaranteed.
The occasion for the talk was a conference entitled, "Deregulation (em The Changing Electric Utility Industry (em Opportunities and Risks," sponsored by the financial house of Bear, Stearns & Co.
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.
What's in a Name?
Charles Studness's article "CPUC Chooses Reregulation over Deregulation" (Financial News, July 15, 1995) reminds me of Humpty Dumpty's scornful remark in Lewis Carroll's Through the Looking Glass: "When I use a word, it means what I choose it to mean (em nothing more nor less."
When Studness discusses "deregulation," it is clearly what he chooses it to mean (em not what the California Public Utilities Commission (CPUC) proposes in its May 24 majority decision on deregulating the electric utility industry.
On the morning after Labor Day, back from one last beach fling, Wall Street Journal assistant features editor Max Boot published an editorial castigating California Gov. Pete Wilson for his alleged failure to "take a stand" on electric deregulation in the Golden State ("California's Governor isn't Plugged into Deregulation Debate," Sept. 5, 1995, p. A15). "There's a leadership vacuum here," writes Boot. "Governor Wilson is partly responsible for the problem ... he appointed Mr. Fessler and the other PUC members.
Stephen P. ReynoldsPresident & CEO
Pacific Gas Transmission Co.
Two or three years ago, gas-fired generation was hailed as a cure-all for everything that ailed the natural gas industry.
The profound changes now occurring in the electric industry will most directly affect those who are engaged in the enterprises of generation, transmission, and distribution of power. But challenges and opportunities confront gas companies as well. Certainly, the electric industry will continue to influence markets for gas: both in bulk fuel supply and in retail energy.
One need only reflect upon the primary sponsors of current efforts to repeal section 210 of the Public Utility Regulatory Policies Act of 1978 (PURPA) to begin to understand the folly of these efforts for the nation. The sponsors do not represent electricity ratepayers, who are claimed to be overpaying billions of dollars as a result of PURPA.
The winds of competition are blowing. Some find them chilling; others find them exhilarating. Deregulation calls on competitive markets to stand in for regulatory decisions, giving more choice to customers, reducing costs dramatically, and requiring new capabilities.
Competition is already transforming major portions of the electric industry.
In his recent article, "The Future of Local Gas Distributors" (Feb 1, 1995, p. 20), Vinod Dar presents a vision of executives at the local distribution company (LDC) lining up to buy cemetery plots (em even as the gas marketers, charging on horseback, seize the high ground of "middle" and
core-markets.
That sort of bravado cannot substitute for an in-depth knowledge of gas distribution. Mr. Dar in fact distorts or ignores many realities of the gas business.