Attorney Edward L. Flippen insists it "doesn't take an economist to figure out" what will happen to electricity prices in a restructured industry that provides for open access and retail wheeling ("Radical Restructuring? Not in My State," Perspective, August 1996, p. 11).
Forgoing an economist, Flippen predicts that electricity rates will reach a national equilibrium point substantially higher than rates currently prevailing in Virginia but below rates in California.
The old shibboleth to some extent is literally true. The electric industry appears different from the natural gas industry in that demand must be matched immediately with production. No viable location comes to mind to put away some of that extra power until it is needed. But literal truth is not necessarily the whole story.
s Merger Magic
"Occasionally, yes. There are obviously some fairly easily measurable synergies in some mergers. . . . The real issue, however,
is not whether there are savings. The real issue is could those savings have been obtained without concentrating the economic power that goes with a merger?
"Generally, we've dealt with it with judgment.
Investors are taking stock
of utility exposure to price competition.The utility trade press and even the general financial press have featured the views of regulators, utility executives, legislators, and various consumer advocates on the stranded-cost question. Stranded costs easily represent the most contentious issue facing the electric industry as it moves to an era of competition.
The authors asked pipelines
and LDCs how they used storage.
Leasing activity proved a surprise.
Since deregulation, the natural gas industry has seen tremendous changes in every sector. Competitive pressures have reorganized business strategies so much that only those firms that adapt will survive. One area that stands ripe for change is the natural gas storage market.
Why build gas storage fields?
High industrial electricity rates are often blamed upon current regulation. Some state regulators respond with broad-based reforms; others simply reallocate system costs from industrial rate classes to rates for more inelastic customers (em namely, residential users.
When the Federal Communications Commission (FCC) instituted the subscriber line charge (SLC), telephone household penetration rates actually increased, even though local rates rose when the SLC was rolled in.
What are the essential characteristics of the system of governance that will be required for a new, North American electric industry with interconnected and interdependent transmission networks and trading areas?
Electric transmission networks are natural monopolies, as are the many independent network
control systems that coordinate the use of generators and loads and preserve system reliability.
If you attended any energy conference in the past year, even one on natural gas, I am confident that at least one panel was devoted to the restructuring of the electric industry.