It comes as no surprise that regulated investor-owned utilities (IOUs) hold divergent views on the restructuring of the electric industry. Size, generation cost, transmission access, customer loyalty, and the friendliness of state regulators all factor into their individual visions of restructuring.
Investigations of changes in the structure of the electric utility industry are growing at the state level.
Differences of opinion make for good horse races and bad jokes about economists, and those who are studying the recent wave of electric utility merger announcements have not let us down. Some of these economists optimistically believe that the mergers act as forces for competition, since they will combine corporate assets and staffs to bolster operating efficiency and market acumen at the merged companies. Other economists, who see transmission as the root of monopoly power, are more pessimistic.
Low Loads, Short Ride
Kevin O'Donnell's article "Aggregating Municipal Loads: The Future is Today" (Oct. 1, 1995) argues that residential and small commercial low-load-factor customers will do well in a competitive environment. Yes, I agree that the future for these customers is definitely today. Low-load customers will do much better in the short run. As long as excess capacity exists, sellers will price at little more than short-run marginal cost. Once excess capacity dries up, however, fixed costs will have to be paid.
Better use of existing data is the key to enhanced revenue.
Utility automation seeks to reduce operational costs and deliver new value-added services.
The first goal is straightforward and quantifiable. For example, when Public Service Co.
Close Close Percent 52-Wk 52-Wk Div Div Book P/E Last
Company Region 06/30/95 10/02/95 Change High Low Rate Yield Value Ratio 12 Mos.Electric UtilitiesAEP Company Inc. Midwest 35.13 36.13 2.85 36.50 30.50 2.40 6.64 22.68 14 2.63
Unicom Corp.
Southwestern Public Service Co. (SPS) and Public Service Co. of Colorado (PSCC) have entered into a definitive merger agreement to form a public utility holding company that will cover one of the largest geographic areas in the nation. Size apart, the merger is unique in that SPS operates as part of ERCOT, and the two utilities are not interconnected. A new transmission line will be built to connect the two companies.
The new holding company will have combined annual revenues of $3 billion, and assets of $6 billion.
Close Close Percent 52-Wk 52-Wk Div Div Book P/E Last
Company Region 03/31/95 06/30/95 Change High Low Rate Yield Value Ratio 12 Mos.Electric Utilities
AEP Company Inc. Midwest 31.75 35.13 10.63 35.75 29.00 2.40 6.83 22.68 13 2.68
Unicom Corp. Midwest 23.75 26.63 12.11 27.75 20.63 1.60 6.01 24.39 14 1.90
Union Electric Co.
Robert S. Silberman has joined California Energy Co. Inc., the largest independent geothermal power producer in the world, as senior v.p. of project development and implementation.NUI Corp. has appointed James R. Van Horn general counsel and corporate secretary. Van Horn was previously senior v.p., general counsel, and secretary at Citizens First Bancorp. Inc.
The interim board of directors of WorldTel has elected Sam Pitroda chairman.
"Green pricing," at typical rates of customer participation, could expand demand for renewable energy beyond current levels by more than an order of magnitude, pushing down production costs for energy resources preferred by environmental advocates. And just as important, that expanded demand would occur outside of the regulatory framework (em matching capacity to customer needs and wants.In practice, the utility asks customers to pay rate premiums to fund the production or purchase of renewable resources.