MIT

All three may apply, especially if regulators go wrong and let ISOs make the business decisions.

Electricity transmission is a real business. With more than $50 billion of net plant, another $3 billion annually in capital expenditures and yearly operating income that could reach $5 billion per year under normal circumstances, the power grid is roughly twice the size of the natural gas pipeline industry. One would never know that from current events, however. Utility management treats transmission as an inconvenient stepchild.

The overwhelming impression is one of growth (em in volume and in the number of participants.

The early 1990s was an anxious period for advocates of emissions trading. Concerns about whether the sulfur dioxide allowance market would ever develop tempered the heady success of the first national emissions trading program implemented by the Environmental Protection Agency under the Clean Air Act Amendments of 1990, Title IV. These concerns were heightened when in May 1992, Wisconsin Power & Light traded 10,000 allowances to the Tennessee Valley Authority.

Does a monopolist aim to maximize profit, or simply to hide from the antitrust laws?

AT&T's absolute monopoly in the switched long-distance telephone market ended in 1976 when MCI rolled out its Execunet service. Twenty years later economists still question whether AT&T can influence the market price of long-distance services.

Recent empirical studies are split on the question, sometimes finding AT&T has considerable market power, and sometimes finding it has none.

It appears that economists studying the long-distance industry may be misinterpreting the historical record.

Identifying a core competency is not as easy as it seems.

Utilities have developed a "Gold Rush" mentality. That is, they have begun to chase after the latest (em and sometimes fleeting (em opportunities, often abandoning their roots and their long-held strengths in the process. Supposedly, this first-in-market race will allow traditional utilities to remain competitive. Yet, all this racing has caused strong regional players to enter markets blindly, without the competitive knowledge or strategic underpinnings that will allow them to succeed in the long term.

Too many rules can make any plant uncompetitive.

Now, more than ever, the commission must weigh

the costs when it looks at health and safety, decommissioning and antitrust impacts. Nuclear assets seem to pop to the surface wherever one looks for causes behind the current upheaval in the U.S. electric utility industry. The nuclear experience (em with its costly prudence reviews so prevalent during the 1980s (em has helped fuel a major shift in attitude.

Senior utility managers have now come to accept fundamental changes in the electric industry.

Lawyers for the Massachusetts Institute of Technology on Feb. 4 argued before the Massachusetts Supreme Court that their client should not be made to pay $6 million to Cambridge Electric Light Co. to cover stranded costs for building its own $50 million on-campus generating plant, as directed by the state utility commission. MIT said it would never have built the plant had it known about the fee. A ruling is expected in the spring.

A federal district court in Massachusetts has ruled that it has no jurisdiction to hear a complaint brought by a qualifying cogeneration facility (QF) concerning stranded-cost recovery charges proposed by an electric utility and approved by the Massachusetts Department of Public Utilities (DPU). (For prior ruling approving the charge, see Re Cambridge Electric Light Co., 164 PUR4th 69 (Mass. D.P.U.

techniques may imply trade-offs in service

quality.By Scott L. Englander, John E. Flory,

Leslie K. Norford, and Richard D. TaborsAs facility manager for a large hotel, you browse your energy vendor's web site to view tomorrow's hourly prices. But it seems your computer (pc) has already done some browsing of its own. Since it's connected to your energy management system, your pc has already looked up the weather forecast and has logged on to the hotel's main computer to find out what rooms will be used.

ADFITs: Not a Phantom

In his article, "Phantom Taxes: The Big Payback" (Courts and Commissions, 7/1/96, p. 41), David Wise argues that utility recovery of stranded facility costs should be reduced by the balance of accumulated deferred income taxes (ADFIT) attributable to stranded costs.

On January 1, 1998, California will "deregulate" the state's electric utilities. The Western Power Exchange (WEPEX) and the independent system operator (ISO) will start up, creating an open market for wholesale power.

Elizabeth A.