Open access to transmission lines, a condition placed upon the UP&L/Pacific Corp. merger by the Federal Energy Regulatory Commission (FERC), was to be expected and is in line with policy that is being developed federally in regard to the deregulation process.
During the past 10 years, we have witnessed the deregulation of the airline industry, trucking industry and a beginning of the process of deregulating the three major regulated utilities, telephone, natural gas, and to some extent electricity.When deregulation of the telephone industry was first proposed, AT&T attempted to either defeat the initiative or at least to delay it, but to no avail. Today, U.S. West, the offshoot of Mountain Bell, will admit that deregulation was one of the best things to happen to it.
It has reorganized into a much more efficient company and still managed to exceed profit goals. Company officials were aware that even without compulsory deregulation they were being forced by technological change into a competitive mode.
Questar, the parent company of Mountain Fuel Supply Company, has recently applied and received approval from the FERC for open access to its gas transmission system. MFS has received approval from the Utah Public Service Commission to provide transportation service upon its system for customer-owned gas.
It logically follows that the electrical utilities should be next in line for the continuance of the deregulation process.
Years ago, when natural monopolies such as telephone, gas and electric utilities were first regulated, this was a necessary occurrence and allowed for the spreading of the cost of development and operations across a broad spectrum of ratepayers and also allowed for the supply of these services to remote areas that otherwise would not have been attractive for the utility to service.
Public Service Commissions have basically carried out an excellent service as watchdogs of the utilities operation, the commissioners themselves will be the first to admit that the system is not perfect and is constantly in a state of flux, deregulation is only part of this constant flux situation.
Deregulation came about following the energy crisis of the 1970's and has continued at a slow pace through the 1980's. It was deemed necessary as a means to protect the national security interests of our nation. However, another development has forced a closer look at the two energy producing segments of regulated utilities, gas and electric.
The United States has, at an alarming rate, become the largest debtor nation in the world. Steps taken by government, such as allowing the value of the dollar to fall against other world currencies in an attempt to reverse this situation have only been partially successful. This method introduces other problems. When the value of the dollar declines it becomes cheaper for other countries to buy up U.S. companies and real estate, this has now reached alarming proportions.
The real answer is to get our cost of production into line with other producing nations. The cost of energy is only one small part of this equation, but it is an extremely important part.
By allowing competition through deregulation it is hoped that improvements to our balance of trade will be effected. With the availability of gas transportation this process is already having effect. Major industry, by purchasing their own gas at the wellhead, can achieve savings of up to 30 percent in their natural gas costs.
With access to the UP&L/Pacific Corp. transmission system, municipal utilities and private industry will be able to operate on the open market to purchase their energy requirements at the best available cost and then have that energy transported to their plant site.
They will also have the alternative of using cogeneration as a means of developing their own electrical and thermal needs and at the same time selling any excess to a remote user.
Perhaps the time has arrived where UP&L/Pacific Corp. should be encouraged to divest themselves of all generation and simply become transporters of electrical energy over their transmission system.
These systems would still require regulation, but with more freedom allowed to independent energy producers to develop and supply electrical energy the utility would achieve greater utilization of their transmission system's surplus capacity without effecting their usual profits or the cost to small consumers.
Some existing inefficient power stations could be retired and small, more efficient systems developed in a competitive market. The day of the large power station, developed with wasted capacity until demand catches up, would be a thing of the past and competition among unregulated power producers would assure a good supply of inexpensive power to industry and residential consumers.
UP&L has provided a valuable service over the years and, fortunately for its customers, had the wisdom to avoid the rush to nuclear energy that has caused massive rate increases in other states. The time has now arrived to re-think this state's energy requirements and to introduce real competition into the market place. The process will be slow and will require some careful examination by the UPSC.
The stage has been set by the FERC and should not be rejected by the UPSC and UP&L without careful consideration.