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The merger agreement between Enron and Portland General Corp. has reshuffled the electric restructuring deck. It makes electric utilities takeover targets for outside suitors after 60 years of peaceful immunity. [...]

The Long Island Lighting Co (LILCO) has raised rates 31% in five years, borrowed heavily, and funneled revenue to shareholders in an attempt to escape its financial problems. The utility initially got in trouble when it closed its Shoreham nuclear power plant, then used its weakness to justify rate hikes while continuing to borrow heavily. New York Governor George Pataki has committed himself to dismantling LILCO, though that would serve Long Island residents poorly. Aggressive management of LILCO is the best possible solution., Nowhere are the failings of traditional utility regulation more evident than on Long Island. The New York Public Service Commission (PSC) has raised rates for the Long Island Lighting Co. [...]

The longer the delay, the smaller the recovery for stranded costs. Technological advances in electric generation and telecommunications make utility competition both possible and inevitable. These economic forces will eventually [...]

California's decision to change their utilities regulation strategy to one based on performance-based regulation is being watched closely by the rest of the nation. California adopted retail wheeling to give consumers more choice, hoping to lower prices. The next step was the unbundling of electric services to allow for more targeted marketing, which will allow the market to determine capacity and promote conservation. It remains to be seen if the industry can remain vertically integrated in such a marketplace., The California Public Utilities Commission (CPUC) issued an order on April 20 proposing radical reform of the state's utility regulation. Specifically, the order would replace traditional cost-of-service regulation with competition [...]

The business of regulatory risk facing electric utilities has been increasing inexorably since the mid-1980's. It began with an increase in regulatory risk created by the liberalized interpretation imprudence adopted [...]

If a single word was to describe 1991 for electric utilities, it would be deceptive. In so many ways the year turned out to be different than it seemed to [...]

The Federal Energy Regulatory Commission's (FERC) opinion approving the proposed merger between Northeast Utilities (NU) and Public Service Company of New Hampshire (PSNH) turned what should have been a rather [...]

There are times when the usually adversarial interests of ratepayers and shareholders coincide. This was true in the mid-1970s when utility managements with the acquiescence of regulators started construction on [...]

Recovering stranded investment is sometimes equated to preserving shareholder wealth. In fact, full recovery of stranded investment by itself will not preserve shareholder wealth in most cases. What is missing [...]

The California Public Utilities Commission (CPUC) moved a tortured step closer to deciding how it will reform its regulation of the state's electric utilities when it adopted a Proposed Policy [...]

The process of determining how to implement utility competition is often cast as a struggle between two opposing camps: shareholders and ratepayers. There are, of course, two other major players, [...]

Electric utilities have a flawed argument for recovery of stranded costs from the public. The argument seeks to justify charges to shareholders or the public for plant investments which are no longer competitive. Typical risky investments are nuclear plants, with extended construction times leading to cost drains. Utilities claim a regulatory compact with the public to supply power, but this does not really exist. The public does not owe the utilities for bad projections or investments., Recovery of stranded investment today marks the central issue in the debate over electric utility competition. Unfortunately, the utility argument in favor of recovery is flawed. It assumes that utilities [...]

Just as retail wheeling is about pricing and not the movement of power, stranded investment concerns financial impairment--not plant closure in a physical sense. Stranded investment arises even for an [...]

Electric utilities rates vary from one locality to the next in the US and reflect the lack of competition within the industry. Electric utilities companies are not subject to the same market forces that promote management and pricing efficiency in other industries. Utilities companies enjoy a regional monopoly that is not subject to competitiveness from without. Furthermore, rates are determined on a cost-plus basis which inherently promotes inefficiency., A geographical uniformity of pricing for major products exists in the American economy and is based on competitive national markets that grew up under the interstate commerce provisions of the [...]

Before deregulation, there was little price competition among airlines. The Civil Aeronautics Board (CAB), the industry's regulator, set fares and granted competitive route authority, but left the airlines free to [...]

The Supreme Court on December 9th declined to review the finding by the Louisiana Public Service Commission (LPSC) that $1.4 billion of Gulf States Utilities' investment in its River Bend [...]

On October 1st, a Texas district court ruled against Gulf States Utilities (GSU) on the main issue in the appeal of a rate decision that was made by the Texas [...]

The impetus for utility deregulation thus far has come from the federal government, and the focus has been on deregulating bulk power generation, an area where the federal government has [...]

The case against re-regulating the electric industry. THE CALIFORNIA DEBACLE has sent ripples across the country throughout the electric industry, building a wave of enthusiasm for re-regulation, and at just [...]

The current rash of utility investments outside of the core franchise businesses appears to follow a pattern: a new spree of diversification every decade. Diversification was the rage in the [...]

With little of the fanfare that surrounds the debate on utility competition, robust cash flows and declining capital outlays have created forces that will reshape the industry no matter how [...]

Despite two years of debate, little progress has been made toward a I solution to the issue of stranded costs. And since the two sides have almost no common ground, [...]

In April, Texas Utilities announced that it would buy ENSERCH, Western Resources launched a hostile takeover bid for Kansas City Power & Light, and The Southern Co. initiated its ultimately [...]

New England Electric System (NEES) and the majority leader of both houses of the Rhode Island Legislature have proposed legislation that would restructure the state's electric utility industry The legislation [...]

Recovery of stranded investment is clearly the central point of contention in the debate over utility competition. Customers oppose competition and utilities favor it - for what appear to be [...]

When Niagara Mohawk Power Corp. announced its competitive restructuring plan on October 6, 1995, it broke ranks with what had been a curiously united front against competition. The opposition had [...]

Traditional utility regulation has been unable to prevent the electric rates of some utilities from rising far above those of neighboring companies. Two factors are responsible for this failure. First, [...]

Regulation of the United Kingdom's 12 regional electricity distribution companies (RECs) has sought to promote efficiency through the use of price caps that are supposed to remain in place for [...]

The financial community's focus on utility competition has been riveted on the proceedings now in progress at state regulatory commissions. The fear that something immediately damaging will come out of [...]

Retail wheeling has been repeatedly condemned by opponents who claim that it would cause rate discrimination between customer classes. They allege that it would unfairly reduce rates for large customers, [...]

Residential customers have found themselves either ignored or ill-used by the major participants in the struggle over utility competition. No group is seeking to secure them the benefits of competition, [...]

The political struggle over utility competition has escalated enormously during the last six months. The immediate focus, of course, is open access or retail wheeling. There have been numerous initiatives [...]

In May, FPL Group cut its dividend per share by 32 percent, from an annual rate of $2,48 to $1.68. While a utility dividend reduction is not terribly newsworthy anymore, [...]

Public utilities and conservationist groups have joined forces in opposition to an Ohio bill that would institute retail deregulation in the state's utility industry. Public utilities oppose the plan because it would topple their monopoly control over the industry. Conservationists oppose it because they fear price competition will stall investments in environment-friendly technology. State consumers have not come forward in support of the bill even though they stand to benefit the most from the deregulations., A retail wheeling bill, introduced in the Ohio legislature by Rep. Ron Amstutz on February 28, has met with powerful and effective opposition from utilities and from conservation and environmental [...]

Government regulations have denied electric utilities the same efficiency incentives that customers have been provided. The energy crisis of the early 1970s resulted in an increased awareness of energy conservation. Consequently, efficiency of use has increased significantly. However, electric utility companies have shown little interest in increasing the efficiency of their power production, because regulations force them to reduce customer rates whenever the company enjoys lower production costs. Furthermore, regulations have forced utilities into long-term investments that tie them to technologies long after their obsolescence., Twenty years have now elapsed since the energy crisis irrevocably changed world energy priorities. The energy crisis banished all apparitions of cheap and almost limitless energy and made the public [...]

Deregulation in the public utilities industry has created great uncertainty among investors. Deregulation will likely result in lower rates and consequently lowered profits. Furthermore, subsequent regulations are likely to affect the industry in ways investors cannot yet forecast. Increased efficiency in electric energy production might further drive down rates by creating energy surpluses. Prospects for investors are not good. Deregulation may result in temporary disruption or large-scale bankruptcy., That increasing competition will put pressure on utility earnings is axiomatic. It will reduce the market power of utilities, and that will cut earnings. The extent and duration of this [...]

Technological advances which have made electricity generation relatively cheap have also made competition within the electric utilities industry economically preferable to the old monopolistic system. The previous expense of producing electricity led to large monopolies which could rely on a fixed client base. Consequently, they could offer reasonable rates with the help of government regulation. However, technological innovations have made a competitive market more viable and cost effective than before. The role of the regulator has changed from monopoly management to competition management., The growth of utility competition can be viewed as driven by two sets of interacting forces: economic (market) forces and political forces. The two sets bear on different aspects of [...]

The growing trend toward competition in the public utilities industry is demonstrating tangible savings to both the industry and the consumer. The costs of managed regulation are difficult to assess, but the industry's first steps toward deregulation already suggest that it represents far greater savings. Estimated savings for 80 sample utilities would be $31 billion. The call for deregulation is expected to grow as such figures become more widely known and proven., Assessing the costs of utility regulation has never been a particularly rewarding endeavor. The difficulty has stemmed from an inability to evaluate with confidence how the industry would behave in [...]