FCC

State regulators turn to telecom to salvage the clout they've lost in energy.

State public utility commissions now seem to spend more time on telecommunications than electricity or natural gas. That's their new power base. The telephone local loop marks the one place where state regulators still have clout.

To test that notion, let's see who attended last month's annual meeting of the National Association of Regulatory Utility Commissioners, held in San Antonio. By my count, out of the first 500 registered attendees, over 120 (24 percent) came from telecommunications firms.

What the Supreme Court thinks about handicapping the incumbent to level the field for new players.

Regulators today sit on the horns of a dilemma: How far to level the field in the name of competition?

If regulators fear market power in the incumbent utility, and so impose restrictions on its activities and assets, they may impair its effectiveness and thus distort the very competition they attempt to foster.

State PUCs

Gas Appliance Repair.

News Digest was compiled by Carl J. Levesque, editorial assistant, Lori A. Burkhart, contributing legal editor, and Bruce W. Radford, editor. For continual news updates, see www.pur.com.Nuclear Power

Transmission & ISOs

Transco Independence. Granting Entergy's request for a declaratory order, the Federal Energy Regulatory Commission ruled in a case of first impression that a stand-alone transmission company ("transco") would meet the test in Order 888 for independent system operators despite passive ownership by a power producer or other market participant.

Studies and Reports

Natural Gas Retail Choice. Utility affiliates hold large market shares in natural gas customer choice programs, raising questions about the extent of true competition, according to a study released on Dec. 15 by the U.S. General Accounting Office. Participation varies by region, however, according to the report, "Energy Deregulation - Status of Natural Gas Customer Choice Programs."

In Pennsylvania, for example, three out of four programs showed very high shares for utility affiliates. The Equitable Gas Co.

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.

THE TELECOMMUNICATIONS INDUSTRY HAS OVERtaken the sweepstakes industry for the dubious title as The Most Complained About Industry.

From January through June of this year, the National Fraud Information Center received 2,071 cramming reports, plus hundreds more calls from consumers with a cramming problem but not enough details for the NFIC to file a formal report. The Federal Trade Commission defines cramming as unexplained charges on a consumer's telephone bill for services never ordered, authorized, received or used.

FERC

GAS PIPELINES. Noting a move toward shorter-term contracts since Order 636, the FERC on July 29 issued an "integrated package" of reform proposals for the natural gas pipeline industry: (1) specific measures in a notice of proposed rulemaking on short-term transportation (transactions shorter than one year); plus (2) an open-ended request for comments in a broader notice of inquiry. RM98-10-000, 84 FERC ¶61,985 [NOPR]; RM98- 12-000, 84FERC ¶61,087 NOI].

THE OLD ADAGE ABOUT INNOVATION STILL HOLDS TRUE: "You can tell the pioneers by the arrows in their backs." More than 70 municipal utilities have either built or plan to build telecommunications systems with fiber-optic and coaxial cable to compete against local cable television, data communications or telephony providers. Profitability for these ventures has been abysmal, but their customers and regulators are happy. Now large, investor-owned electric utilities are stumbling down the same trail marked with cast-off bandages of these early pioneers.

IF CONGRESS SHOULD CONSIDER LEGISLATION TO MANDATE retail wheeling - and even with a date certain - those states that have already opened their markets will still likely ask for reciprocity to guarantee that any competitor seeking entry will welcome competition in its own home territory. Why? Some states are moving more quickly than others. Second, others have indicated they do not intend to open at all.

Arguably, state lawmakers could enact a reciprocal covenant on their own.