Detroit Edison

Special Contract Rate Trend Continues

As regulators continue to investigate industrywide restructuring as an answer to regional electric rate disparities and calls from large consumers for price reductions, the trend of dealing with the problem through rate discounting also remains strong. Regulators have taken steps to ensure that shareholders bear at least some of the risk for revenue shortfalls that might result under the new contracts.

Marketing & Competing

Current utility marketing efforts focus almost entirely on large customers or "key" accounts, responding reactively to competitive threats such as self-generation, municipalization, and even geographic relocation. These threats have become all too real for many utilities. Niagara Mohawk Power Corp. has lost 15 percent of its large industrial load in the last 15 years. The recently negotiated long-term power contracts between Detroit Edison and the Big Three automakers are a conscious response to the looming threat of retail wheeling.

Electric Industry Restructuring: The States Forge Ahead

About 30 states have begun (em

either through the legislature, the utility commission, informal working groups, or some combination of these (em to consider issues such as retail wheeling, unbundled utility structures, and alternative rate regulation.1 California's "Blue Book" hearings have drawn the most attention, but significant efforts are also underway elsewhere. Although each state is approaching the issue in its own way, successful industry restructuring will ultimately require coordination across state lines.

Michigan Affirms Electric Discount Rates

The Michigan Public Service Commission (PSC) has reaffirmed its earlier approval of special manufacturing contracts submitted by Detroit Edison Co. to supply power to Chrysler Corp., Ford Motor Co., and General Motors Corp. Opponents had argued that the PSC erred by approving the price discounts while deferring consideration of their rate treatment as well as their effect on existing competitive programs.

Michigan Gets Retail Wheeling Rates

The Michigan Public Service Commission (PSC) has set rates and charges for delivery service for a five-year experimental retail wheeling program involving Detroit Edison Co. (DE) and Consumers Power Co. (CP). The program will be implemented the next time the utilities solicit new capacity (Case No. U-10143/10176). The ruling follows an April 11, 1994, PSC order approving the framework for the retail wheeling experiment. The rates pertain to industrial customers with 5 megawatts of retail delivery capacity that use about 3 million kilowatt-hours (Kwh) of electricity per month.

Take No Prisoneers? A Price-War Strategy for Electric Utilities

In talking to electric utility managers from across the country we have found that most believe direct access will have major repercussions on all aspects of their business by the end of the decade. Not surprisingly, there is an emerging consensus that revenues will drop rapidly as supply options grow for retail customers.

Detroit Edison Sole Supplier for "big Three"

Detroit Edison Co. (DE) has received approval from the Michigan Public Service Commission for

10-year sole-supplier contracts for electric power and related services with Chrysler, Ford, and General Motors. (Case No.

U-10646). DE is believed to be the first utility in the nation to secure such agreements for an entire industry in its service territory

The almost identical contracts involve a

1,000-megawatt combination of firm and interruptible power, giving rate discounts to the automakers.

Financial News

There is a price to pay for becoming a lean, mean fighting machine, and utilities paid the price in 1994.

A number of electric utilities saw revenues increase last year on the strength of higher sales, but the costs associated with laying off hundreds of employees and downsizing company operations took a significant bite out of earnings.

A PUBLIC UTILITIES FORTNIGHTLY survey of the nation's top 20 electric utilities shows an increase in their combined 1994 revenues to $107 billion, a healthy 3.6-percent rise over the previous year.

Financial News

There is a price to pay for becoming a lean, mean fighting machine, and utilities paid the price in 1994.

A number of electric utilities saw revenues increase last year on the strength of higher sales, but the costs associated with laying off hundreds of employees and downsizing company operations took a significant bite out of earnings.

A PUBLIC UTILITIES FORTNIGHTLY survey of the nation's top 20 electric utilities shows an increase in their combined 1994 revenues to $107 billion, a healthy 3.6-percent rise over the previous year.

Rate Discounts Pave the Way for Restructuring

Much attention has been paid to revolutionary rate-reform plans advanced to meet perceived competition in energy markets. So much, in fact, that the increasing popularity of the special discount rate has gone virtually unnoticed.