Security

Diversification, Round Two: Telecom Act Has Electrics at it Again.

Once burned, but twice eager, utilities reprise their 1980s-era strategy, this time in the telephone business.

"It's not like they're going to open a pharmacy. It is directly related in some way, or at least arguably."

Earlier this year, 15 utilities grabbed the brass ring: a full-blown chance to enter the telecom business.

Joules

Entergy Corp. signed a letter of intent to acquire National Security Service, a security monitoring company that operates in North Carolina and Alabama. Entergy claims the acquisition places it among the top alarm companies in the country.

K Energy, Inc. has begun "Simple ChoiceSM" (em energy, communications, and "infotainment" services in one package, paid with one bill.

OASIS: Networking on the Grid

Despite a recent delay, the stage

appears set for online trading

in electric transmission capacity.

THIS IS ONLY A TEST (EM FOR NOW.

But come January, if all goes well, the OASIS program will start up in real time, with customers venturing onto the Internet to place reservations for capacity on the nation's electric transmission grid.

People

Ronald L. Adams, an executive from Transcontinental Gas Pipeline, was named president of CNG Transmission Corp. He replaces L.J. Timms, Jr., who retired.

Lee Elder was hired by GE Nuclear Energy as manager of market development. Elder was g.m. of nuclear marketing and technology for Black & Veatch and started a joint venture between the two companies to service boiling water reactors.

The Oklahoma Corporation Commission has hired Richard L. Heck, a former U.S.

Corporate Unbundling: Are We Ready Yet? A Bondholder's Primer

So the Federal Energy Regulatory Commission (FERC) won't break up the electric utility industry. But it may happen anyway (em if not at the FERC's direction, then perhaps under pressure from state regulators who, some say, are threatening to link stranded-cost recovery to vertical disaggregation.

What would a breakup mean for bonds and bondholders?

As we reported last month ("New Corporate Structures Place Bondholders at Risk," May 1, 1996, p.

A Milestone Year: Power in the Commodity Markets

Paper trading is here, introducing an element of speculation in wholesale electric markets.The electric power industry joined the commodity markets on March 29, 1996, when power futures began to trade on the New York Mercantile Exchange (NYMEX). This first tentative step in the commoditization of electricity promises the emergence of a paper market for power, which, as in the case of other commodities, will likely prove substantially broader and more complex than electricity's physical market.

New Corporate Structures Place Bondholders at Risk

A Moody's report, Legal Disaggregation Threatens Bondholder Security, warns that bondholders (em previously secured by a blanket lien on substantially all of a utility's property (em may find themselves secured solely by generating assets, whose real market value may be less than the outstanding secured debt. Moody's identifies 14 companies that may spin off transmission and distribution (T&D) assets, retaining generating assets because of indenture restrictions.

People

A Moody's report, Legal Disaggregation Threatens Bondholder Security, warns that bondholders (em previously secured by a blanket lien on substantially all of a utility's property (em may find themselves secured solely by generating assets, whose real market value may be less than the outstanding secured debt. Moody's identifies 14 companies that may spin off transmission and distribution (T&D) assets, retaining generating assets because of indenture restrictions.

Frontlines

Deregulate in haste; repent at leisure. That's what they say about love, marriage, and ratemaking. Yet, in the utility business the regrets are pouring in (em sometimes from the same people who sent out the invitations.

For example, at the end of November, a week before I put fingers to keyboard, the FERC was shocked to discover that the proposed Altus merger between The Washington Water Power Co. and Sierra Pacific Power Co.