Deregulation and Diversification of Utilities PDF
Preview Deregulation and Diversification of Utilities
DEREGULATION AND DIVERSI FICATION OF UTI LITI ES Topics in Regulatory Economics and Pol icy Series Michael A. Crew, Editor Graduate School of Management Rutgers University Newark, New Jersey Previously Published Books: Rowley, C. Tollison, R., and Tullock, G.: Political Economy of Rent-Seeking Frantz, R. X-Efficiency DEREGULATION AND DIVERSIFICATION OF UTILITIES edited by Michael A. Crew Graduate School of Management Rutgers University Newark, New Jersey ~. Kluwer Academic Publishers "BostonlDo rdrechtlLondon Distributors for North America: Kluwer Academic Publishers 101 Philip Drive Assinippi Park Norwell, Massachusetts 02061 USA Distributors for the UK and Ireland: Kluwer Academic Publishers Falcon House, Queen Square Lancaster LAl lRN, UNITED KINGDOM Distributors for all other countries: Kluwer Academic Publishers Group Distribution Cent re Post Office Box 322 3300 AH Dordrecht, THE NETHERLANDS Library of Congress Cataloging-in-Publication Data Deregulation and diversification of utilities I edited by Michael A. Crew. p. cm. - (Topics in regulatory economics and policy series) The result of two seminars held Oct. 30, 1987, and May 6, 1988, at Rutgers University. Includes index. 1. Public utilities-Unites States-Deregulation. I. Crew, Michael A. II. Series. HD2766.D47 1989 363.6 '0973-dc 19 88-29752 CIP ISBN-13: 978-1-4684-6899-1 e-ISBN-13: 978-1-4684-6897-7 DOl: 10.1007/978-1-4684-6897-7 Copyright © 1989 by Kluwer Academic Publishers Softcover reprint of the hardcover I st edition 1989 All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher, Kluwer Academic Publishers, 101 Philip Drive, Assinippi Park, Norwell, Massachusetts 02061. Contents Authors and Discussants vii Preface and Acknowledgments ix 1 Competition, Diversification, and Disintegration in Regulated 1 Industries Michael A. Crew 2 Feasibility of Deregulation: A Public Choice Analysis 5 Michael A. Crew and Charles K. Rowley 3 Price Cap Regulation of Telecommunications Services: 21 A Long-Run Approach Ingo Vogelsang 4 Efficiency Aspects of Diversification by Public Utilities 43 Roger Sherman 5 Efficient Income Measures and the Partially Regulated 65 Firm Shimon Awerbuch 6 Decentralized Pricing in Natural Monopolies 89 William A. Hamlen, Jr., and Susan S. Hamlen v vi DEREGULATION AND DIVERSIFICATION OF UTILITIES 7 New Technologies and Diversified Telecommunications 107 Services: Policy Problems in an ISDN Environment Almarin Phillips 8 Contestable Markets and Telecommunications 127 Richard E. Simnett 9 Competition and Cooperation in Deregulated Bulk Power 143 Markets Scott R. Herriott 10 Diversification, Deregulation, and Competition: 165 Cost of Capital Implications for Electric Utilities Leonard S. Hyman and Heidimarie West 11 The Financial Fallout from Chernobyl: 183 Risk Perceptions and Regulatory Response Catherine C. Eckel and Theo Vermaelen Index 203 AUTHORS AND DISCUSSANTS Shimon Awerbuch, Assistant Professor of Finance, University of Lowell Lawrence P. Cole, Pricing Analysis and Plans Manager, GTE Service Company Michael A. Crew, Professor of Economics and Director of the Center for Research in Regulated Industries, Graduate School of Management, Rutgers University Catherine C. Eckel, Assistant Professor of Economics, Virginia Polytechnic Institute Theresa A. Flaim, Senior Economist, Economic Research Department, Niagara Mohawk Power Corporation Michael Frierman, Assistant Professor of Economics, Graduate School of Management, Rutgers University Robert A. Gerber, President, Hackensack Water Company Michael L. Goetz, Associate Professor of Economics, Temple University Susan S. Hamlen, Associate Professor of Operations Analysis, State University of New York at Buffalo William A. Hamlen, Jr., Associate Professor of Economics, State University of New York at Buffalo Krishna G. Hegde, Assistant Professor of Finance, Graduate School of Management, Rutgers University John A. Helmuth II, Assistant Professor of Economics, Rochester Institute of Technology Scott R. Herriott, Assistant Professor of Strategy, University of Iowa vii viii AurnORS AND DISCUSSANTS Leonard S. Hyman, Vice President, Merrill Lynch Jeffrey Lahm, Staff Manager, New Jersey Bell Telephone William W. Lanen, Assistant Professor of Accounting, The Wharton School, University of Pennsylvania James Leva, President, Jersey Central Power and Light Eileen A. Moran, Assistant Treasurer, Public Service Electric and Gas Company Chieu Nguyen, Senior Engineer, GPU Service Corporation H. Edwin Overcast, Director-Rates and Economics, Northeast Utilities Service Almarin Phillips, Hower Professor of Public Policy, Economics and Law, University of Pennsylvania Anthony P. Pusateri, District Manager, New Jersey Bell Telephone Mark Reeder, Chief of Economic Research, New York State Department of Public Service Rob Rockefeller, Staff Director-Regulatory Policy and Analysis, NYNEX Service Company Charles K. Rowley, Dean of the Graduate School, George Mason University Donald L. Schlenger, Vice President-Business Development, Hackensack Water Company Joseph C. Schuh, Director of Economics, Orange & Rockland Utilities Saikat Sen, Manager-Marketing Plan Implementation, AT&T Communications Roger Sherman, Professor of Economics, University of Virginia at Charlottesville Richard E. Simnett, District Manager-Public Policy Issues Analysis, Bell Communications Research Sheldon Switzer, Senior Rate Analyst, Baltimore Gas and Electric Theo Vermaelen, Associate Professor of Finance, INSEAD P.V. Viswanath, Assistant Professor of Finance, Graduate School of Management, Rutgers University Ingo Vogelsang, Professor of Economics, Boston University lIeidimarie West, Research Analyst, Merrill Lynch PREFACE AND ACKNOWLEDGMENTS This book is a result of two seminars held at Rutgers-The State University of New Jersey on October 30, 1987, and May 6, 1988, entitled "Deregulation and Diversification of Utilities." Ten previous seminars in the same series resulted in Problems in Public Utility Economics and Regulation (Lexington Books, 1979), Issues in Public Utility Pricing and Regulation (Lexington Books, 1980), Regulatory Reform and Public Utilities (Lexington Books, 1982),Ana- lyzing the Impact ofR egulatory Change (Lexington Books, 1985), and Regulat- ing Utilities in an Era of Deregulation (Macmillan Press, 1987). Like the previous seminars, these seminars received financial support from leading utilities. The views expressed, of course, are those of the authors and do not necessarily reflect the views of the sponsoring companies. I thank AT&T, Atlantic Electric Company, Elizabethtown Gas Company, Elizabe- thtown Water Company, Garden State Water Company, GTE Service Com- pany, Hackensack Water Company, Jersey Central Power & Light Company, New Jersey Bell Telephone Company, New Jersey Natural Gas Company, New Jersey-American Water Company, New York Telephone Company, Niagara Mohawk Power Corporation, Northeast Utilities Service Company, NYNEX Service Company, Public Service Electric and Gas Company, Rock- land Electric Company, Shorelands Water Company, South Jersey Gas Com- pany, and United Telephone Company of New Jersey. The support went far beyond financial assistance. Company managers freely gave their time and advice and, on several occasions, provided information about their industries. I especially thank George Baulig, Peter Ciccone, Bill Cobb, Lawrence Cole, Don Conyers, Frank Critelli, Frank Delany, A Noel Doherty, Kevin Fennell, Theresa Flaim, Robert lacullo, Edward Jones, Patricia Keefe, Alfred Koeppe, Brian Lane, James Lees, Clifford Mastrangelo, Russell Mayer, Edwin Over- ix x PREFACE AND ACKNOWLEDGMENTS cast, Henry Patterson III, Glenn Phillips, Don Schlenger, Joseph Schuh, Paul Schumann, Christopher Turner, Michael Walsh, George Wickard, and Bill Wiginton. Many thanks are owed to the distinguished speakers and discussants, listed on pages vii and viii, for their cooperation in making the seminars and this book possible. They all worked very hard in achieving deadlines, without which the speedy publication of this book would have been impossible. I would especially like to thank Linda Brennan, Adminstrative Assistant in the Center for Research in Regulated Industries. Not only did she provide able editorial and research assistance but she also mastered PagePerfect, the pc-based typesetting program used to provide the camera-ready copy for this book.. The usual disclaimers are applicable. None of the people named here is responsible for any errors. The views expressed are the views of the authors and not of the sponsoring companies. MICHAEL A CREW
The list of books you might like
