Erroll B. Davis, Jr.
President & CEO
Wisconsin Power & Light Co.
WP&L advocates that the following steps be taken to create a level playing field for merchants entering the retail market:
s Distribution rates should be fully unbundled from retail sales tariff rates.
While setting a new gas cost adjustment rate for Delmarva Power & Light Co., a combined electric and gas utility, the Delaware Public Service Commission (PSC) found the utility's unaccounted-for-gas incentive program unnecessary because it had accomplished its objective, as evidenced by a steady decline in the rate of unaccounted-for gas. The PSC approved a $300,000 incentive award for the current adjustment. Re Delmarva Power & Light Co., PSC Dkt. No. 94-123F, March 21, 1995 (Del.P.S.C.).In another case, the PSC allowed Chesapeake Utilities Corp.
mergers? For
instance, why
combine two vertically integrated utilities when the market may call for disaggregation?
All deregulating industries share the same lesson: profits eventually decline, leading to consolidation. Electric utilities are no different.
The Pennsylvania Public Utility Commission (PUC) has reaffirmed earlier rulings establishing performance-based rate mechanisms for Columbia Gas of Pennsylvania, Inc., citing its authority to implement modified versions of a capacity-release sharing mechanism and an incentive mechanism for purchased gas costs.
The Pennsylvania Public Utility Commission (PUC) has reaffirmed earlier rulings establishing performance-based rate mechanisms for Columbia Gas of Pennsylvania, Inc., citing its authority to implement modified versions of a capacity-release sharing mechanism and an incentive mechanism for purchased gas costs.
My subject today is regulation and competition in the electric utility industry.
You all know only too well what's happened to this industry in the last decade or so: Inflation accelerated, interest rates rose, productivity growth slowed, fuel prices rose dramatically, growth in demand stopped, and the cost of meeting environmental and safety regulations soared. For utilities that was truly a devil's brew.
Our industry stands at the threshold of significant change. Competitive forces and significant technological advances beckon the nation's electric utilities to step forward. The electric industry has the opportunity to create a future that provides the benefits of competition to all customer groups. If we don't restructure, someone else will do it for us.
The year-long decline in the electric utility stock market has caught most market observers off guard. Picking the winners among electrics has become more difficult. Says Ed Tirello, long-time market savant and utility equity analyst at NatWest Securities, "Competition and retail wheeling have made the selection process nearly impossible short term."
To identify tomorrow's best industry performers, electric utility analysts have focused on generation.
The year-long decline in the electric utility stock market has caught most market observers off guard. Picking the winners among electrics has become more difficult. Says Ed Tirello, long-time market savant and utility equity analyst at NatWest Securities, "Competition and retail wheeling have made the selection process nearly impossible short term."
To identify tomorrow's best industry performers, electric utility analysts have focused on generation.
Competition in electricity is part of a general trend toward deregulation (em from airlines to stock markets (em that characterized economic evolution in much of the western world during the 1980s. The move to liberalize electricity in some countries has been spurred on by the disenchantment of politicians and large customers with the traditional monopolistic arrangements. Monopoly not only prevented customer choice, but was increasingly seen as inefficient and paternalistic.