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March 2001 Issue 1 |
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US
- what's really happening in California ? Most people in the utilities sector have heard at least something
about rolling blackouts in California, and probably at least know the
names of two utilities involved - Southern California Edison (SoCalEd)
and Pacific Gas & Electric (PG&E). But what is really happening ? As we see it there are three key issues involved…. 1. SoCalEd and PG&E were required to
divest their generation plant in order to promote wholesale competition . 2. Retail supply is still regulated at rates
set by the California Public Utilities Commission. 3. The wholesale purchase price has increased. This has left SoCalEd and PG&E exposed to higher prices which
they are unable to pass on to their customers, leaving them with huge
debts. As this saga
unfolds, we will revisit it in future issues of Pipes & Wires. UK - the consequences of excessive regulation The privatised water companies are subject to CPI - X price
control, very similar to the electricity companies. The regulator, OFWAT, recently imposed heavy price controls on the
water companies, but in addition some of the water companies were
required to make significant investments for environmental and public
health reasons but were not allowed to treat these as pass-through costs. Hyder plc, the owners of Welsh Water and SWALEC, subsequently
decided to exit the utilities business. The SWALEC wires business was
sold to Western Power Distribution (formerly SWEB), whilst options for
divesting Welsh Water's pipes business included sale to Nomura (a
Japanese bank) and sale to a debt-funded mutual (a sort of a trust
arrangement). The former regulator rejected both options, whilst the new
regulator, Philip Fletcher, has approved the latter
option subject to several licence modifications
and other conditions. |
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1 |
Welcome to Pipes &
Wires |
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1 |
US - what's really
happening in California ? |
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1 |
UK - the consequences of excessive regulation |
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2 |
UK - ring-fencing the distribution business |
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2 |
NZ - progress on electricity price control |
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2 |
Current comment |
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2 |
NZ - possible merger of water activities |
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2 |
Aus - ring-fencing the distribution businesses |
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2 |
NZ - disclosing gas asset management plans |
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2 |
Up & coming conference presentation |
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Advance notice…. A bit of
advance notice … Utility Consultants is relocating its office to
Hamilton, New Zealand in the near future. As things become clearer, we
will advise the new address, phone and fax numbers, but we can always be
contacted by… Mobile
+64-21-606670 Email mail@utilityconsultants.co.nz Palmerston
North, New
Zealand www.utilityconsultants.co.nz |
Welcome to the
first issue of Pipes & Wires, the client newsletter of Utility
Consultants that reviews topical issues in the electricity, gas and water
industries. Pipes & Wires will review issues specific to the NZ industry,
and also examine global issues that may impact on the NZ industry.
UK - ring-fencing the distribution businesses The Electricity Act 1989 defined the Public Electricity Supply
License (PES) that is (was) required to participate in the industry. The
Utilities Act 2000 inter alia
redefined 4 classes of PES (viz, generation, transmission, distribution and
supply) and prohibits the same legal entity from holding both a
distribution and a supply license. This has led to a raft of structural changes - some utilities have
opted to place their supply business into a legally distinct subsidiary,
some have sold to other supply businesses, whilst some
have sold to generators.