Infrastructure

The Pennsylvania Public Utility Commission has entered a cooperative agreement with the state's Infrastructure Investment Authority to better coordinate efforts by both agencies to improve the viability of small water and wastewater systems across the state.

The commission said many small systems had not increased rates when needed and had become unprofitable. The systems had been unable to acquire financing to make improvements to maintain good service quality and to meet future regulatory challenges.

While the prices play catch up, utilities and regulators should start looking for ways to mitigate costs.

Water utility rate increases have outpaced those of other utilities. In fact, water rate increases since 1984 %n1%n have surpassed the overall rate of inflation. Yet among utility services, water remains a real bargain; consumers spend less on water than on any other utility.

s The technology is digital.

s The medium is cyberspace. The product is a strategic system for billing, collection and customer services (BCCS) that integrates knowledge and choice through an automated customer interface.

The impending obliteration of the business boundaries between the gas, electric and other energy industries will launch a series of convergent waves of change. Executives, regulators, legislators, investors and, naturally, consumers must ride this wave over the next 10 to 15 years.

Each assumes a vertical breakup, but watch out for securitization.

It can prove difficult to detect any overt difference of opinion among financial credit rating agencies. That appears to be the case in today's electric utility industry, where Moody's, Duff & Phelps, and Standard & Poor's each predicts that a breakup of the vertically integrated utility is now virtually inevitable. The result, they say, will leave us with an industry made up of disaggregated high-risk power generators, and lower-risk companies engaged in transmission, distribution, and other related services.

No one needs to tell the readers of PUBLIC UTILITIES FORTNIGHTLY about the technical, economic, regulatory, and institutional obstacle course facing the nuclear power industry. All you need do is look around to see an industry struggling to live up to expectations. Some would term the nuclear outlook "grim:"

• No economic incentives to build new nuclear plants.

• No new plant orders in the United States (a modest complement of foreign orders)

• Precious few attempts to renew operating licenses; even fewer succeed.

Early on in the debate, the legislature had signaled the commission that it would need the blessing of lawmakers to pursue its agenda.This past August, during the waning days of a two-year session, the California Legislature unanimously passed a landmark bill to deregulate the state's $23-billion electric utility industry.

The new law, known as "Assembly Bill (AB) 1890, largely reaffirms the broad outlines of the December 1995 Final Policy Decision issued b

Two recent decisions from Hawaii and Michigan illustrate some of the issues now arising on the question of resale of telephone service by local exchange carriers (LECs).

In Michigan, the state public service commission has directed the state's LECs to offer all basic local exchange services for resale in a nondiscriminatory manner to competitors and affiliates at wholesale rates. It defined "wholesale rates" as retail rates less the avoided costs to the LEC.

Management expert Peter F. Drucker has observed that our society has entered a "post-capitalist" stage in which economic activity is organized around information: "The basic economic resource ... is no longer 'capital' nor 'natural resources'...

The Geneva summit between Ronald Reagan and Mikhail Gorbachev signaled the beginning of the end of the Cold War. With a diminished threat of East-West confrontation, countries throughout the world gradually reoriented their priorities (em away from politico-military security and toward economic development. To paraphrase Woodrow Wilson, the end of the Cold War had made the world "safe for capitalism."Now, 10 years later, with a few notable exceptions in the Balkans and elsewhere, evidence abounds to support that appraisal, from Argentina to Prague to Manila.

The structure of the utility and telecommunications industries has changed significantly since I began my role as a regulator 15 years ago. Technological developments and a competitive environment, as opposed to regulation, have provided the major catalyst for change. As a result, utility companies, which have historically enjoyed the favor of Wall Street investors, will soon face unprecedented revenue growth problems.