Title: PURC review
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Permanent Link: http://ufdc.ufl.edu/UF00091019/00001
 Material Information
Title: PURC review
Physical Description: Serial
Language: English
Creator: Public Utility Research Center, Warrington College of Business, University of Florida
Publisher: Public Utility Research Center, Warrington College of Business, University of Florida
Place of Publication: Gainesville, Fla.
 Record Information
Bibliographic ID: UF00091019
Volume ID: VID00001
Source Institution: University of Florida
Holding Location: University of Florida
Rights Management: All rights reserved by the source institution and holding location.


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Fall Vol. 8

2000 No. 1

Thanks to our sponsors and friends, the Public Utility Research Center is able to conduct programs which
are mutually beneficial to the energy, telecommunications, regulatory, and academic communities. In an
attempt to keep you informed of developments, we publish the PURC Review in the Fall, Winter/Spring,
and Summer.



Paul M. Sotkiewicz has joined PURC as the new Director of
Energy Studies (MA University of Minnesota, 1995; currently a PhD
candidate). He comes to UF from the Federal Energy Regulatory
Commission, where he worked on the staff of the Chief Economic
Advisor. At FERC his duties included monitoring electricity markets
and conducting applied research on electricity market design for
energy and ancillary service markets. He Ibfcused particularly on New
York and California independent system operator market. His areas
of expertise are energy and environmental economics, public eco-
nomics, and applied microeconomics which he taught while at the
University of Minnesota. Paul M. Sotkicwicz
A recent paper, "Opening the Lines," appears in Forum fbr Applied Research and o Public Policy in a
special issue on the role of public power in utility restructuring. His dissertation examines the impact of
state-level PUC regulation on compliance costs associated with EPA's sulfur dioxide program. Other
papers he has written include "Regulatory Evolution, Market Design, and the Unit Commitment
Problem" (with R. O'Neill, U. Ilelman, W. Stewart, Ml Rothkopf), "Market Design in the Northeastern
U.S. Wholesale Electricity Markets: Events and Issues, 1999" (with U. Hclman), and "Equilibrium Prices
in Auction Markets with Non-Convexities" (with R. O'Neill, B. Hobbs, W. Stewart, M. Rothkopf). He
has made presentations on market design issues in electricity restructuring and on pollution markets to
various audiences including the Department of Energy. Energy Information Administration, the Energy
Modeling Forum at Stanford University, and the Florida Energy, 2020 Study Commission.
Paul will greatly add to PURC's outreach capabilities in the Florida and U.S. energy industry. He will
also participate in future PURC/World Bank International Training Programs on Ultility Regulation and
Strategy. lie can be contacted at 352-392-7842; e-mail: sotkicpm@dale.cba.ufl.edu

SCalendar ofEvents for 2001

PURC Annual Conference February 22-23, 2001 UF Hotel and Conference Center, Gainesville
"Alternative Futures for Energy and Telecommunications". ... .... -.
For more than 25 years PURC's conferences have brought together representatives from ~ Contac :
regulatory commissions, government agencies, universities, consulting organize ions, telecom- Pamela Caf
munications suppliers, and energy firms. Leading experts address utility issues confronting ; or
Florida and the nation, Keynote speakers help us understand the technological, economic, and: Kat Worden
political forces that complicate decision making by executives and regulators. The first day is ..-... ,.
highlighted by our traditional roundtable discussion of regulatory issues by Florida Public
Service Commissioners. On Friday, concurrent sessions offer the opportunity for smaller groups to share
their ideas about developments in energy and telecommunications.
Registration information will be mailed in January 2001

Ninth PURC/World Bank International Training Program on Utility Regulation and Strategy
,.January 15-26, 2001 UF Hotel and Conference Center, Gainesville
'Conlacl: PURC and the World Bank deliver a two-week program on utility regulation and strategy
i Pascale Parker 1 for countries undertaking infrastructure reforms in electricity, gas, telecommunications, and
or water utilities, It has successfully trained nearly 700 participants from 98 nations. In addition,
iVirginia fIessels | short-term study visits to PURC are organized for international agencies whose members are
352-392-3655 t unable to attend the longer program.
' 7 "lw a w a ,- a w w~ m ,

PURC Reference CD-
ROM for Internal Training |

Projects andA ctivites I

Thanks to funding from the In-
ternational Center for Automated
Information Research, PURC has
expanded its web and electronic
information capabilities. A CD-
ROM was developed containing
regulatory materials to be used in
conjunction with on-site training.
In addition, PURC collaborated
with the University of Wyom-
ing's Public Utility Rescarch and
Training Institute to create a
search engine and database for
research summaries of articles on
regulatory topics from 20 top tier
journals. Further plans include
the creation of an Internet-based
forum in which regulators and
government policy makers may
conduct discussions on line (at
www.purc.org) across interna-
tional boundaries.

Communications Competitiveness Research Initiative

The Communications Competitiveness Research Initiative
(CCRI) is involved in several projects. CCRI Principal Investigator
Mark Jamison serves as academic advisor to Julia Johnson for
Governor Bush's task force itFloridacom. He and UF students Eric
Chang, Jason Mills, and Eileen Pun hosted workshops, conducted
research on how states support technology businesses, assisted
subgroups working on infrastructure and business development, and
prepared data for the task force web site.
Additional CCRI projects include a study of how regulatory
policies affect the development of telecommunications competition
in the U.S., a cross-country comparison of U,S. and European
policies, Internet backbone connectivity and Internet mergers. Mark
also collaborates with colleagues from other UF departments, He
and Professor Sylvia Chan-Olmsted (Telecommiiunication) are con-
ducting studies of global strategies for telecommunications and
media companies. Professor Rhonda Phillips (Urban and Regional
Planning) is preparing information on ISPs and Internet backbone
availability in Florida.


- -~p~

The Latest at PURC:

Industry Structure and Pnrcing: The New
Rivalry InfrastructMur
Mark Jamison's new book (Nov. 1999) extends current economic
models by incorporating effects of actual and potential rivalry in
markets outside the markets of immediate interest. Focusing on the
contestable model, Jamison shows how diverse patterns of actual and
potential rivalry, called multilateral rivalry, affect the appropriateness
of many regulatory policies. Many conclusions of the contestability
literature are overly generous to firms that might want to protect or
extend their monopoly positions. While this book's refinement to
existing economic theory gives strong results, it is still based on static
production functions and demands, integrated to provide a dynamic
view of multilateral rivalry. It can be ordered from Kluwer Academic
Publishers at: kluwer@awkap.com (ISBN 0-7923-7708-7).
"Developments in Best-Practice Regulation: Principles,
Processes, and Performance"
Sanford Berg provides an overview of developments in best-practice
regulation. The paper identifies issues that investors and executives
consider when determining infrastructure activities in emerging mar-
kets. The focus is on regulatory governance: how new regulatory
agencies need to be insulated from ongoing political pressures while
utilizing processes that promote participation, transparency, and pre-
dictability. The Electricity Journal, July 2000.


"More is Less? Regulation in a
Rent Seeking World"

James Dewey (Bureau of Eco-
nomic and Business Research,
UF) examines competition be-
tween two interest groups that
engage in strategic lobbying to
influence regulatory decisions.
He shows that technological
change can be detrimental to all
parties. The circumstances under
which this might occur, along
with several applications includ-
ing the decision to deregulate, are
considered. It is also shown that a
simultaneous increase in both
groups' marginal lobbying costs
benefits the low-cost group and
harmrs the high-cost group. Forth-
coming in the Journal of Regula-
tory Economics.

Marshall M. Criser Chair
Established at UF

William H. Page will join the
Fredric G. Levin College of Law
as the Criser Eminent Scholar in
Electronic Communications and
Administrative Law. He is one of
the nation's top experts on an-
titrust laws and how they should
apply to the Internet and the new
information economy. He has
published nuLmerous articles on
the government's recent antitrust
case against Microsoft.
Former UF President Marshall
Criser (1984-'89) and his wife,
Paula, initiated the Criser Chair
through a- $600,000 gift; which
was enhanced by state iunds.


Graduate Student Success

Luis Guticrrcz (PhD May'O0),
a on-ner PURC research affili-
ate, focused on Latin American
teleco mmunications reform. His
dissertation stressed the effects
of privatization on performance,
the importance of regulatory
framework; the features of agen-
cies that promote efficiency.
Maria Coriton (MA May '00)
researched benchmarking tech-
niques and estimated cost func-
tions for the water sector in Peru
that provided useful in abortionn
for regulators and investors.

"The Impact of Derivative
Usage on Firm Value in the
Utilities Industry"

Andy Naranjo (Finance) and
Larry Fauver (U Miami) received
PURC funding to research the ef-
fects of derivative usage on firm
excess value. They also investigate
the interactions among derivative
usage, product diversification, ge-
ographic diversification, and firm
excess value for firms in the utili-
ties industry. Data is gathered
from over 100 utility lirms in the
U.S. from 1991 to 1995. They find
that utility firms that use derivative
instruments are more valuable than
firms that do not use them; the
value gain is greater for focused
firms than for diversified firms.

I I __~~__~




Warrington College of Business Administration
PO Box 117142
Gainesville, FL 32611-7142

erm-i No, 94


Sanford V. Berg, Director of PURC and the Florida
Public Utilities Professor, was appointed by Governor
Bush to the Florida Energy 2020 Study Commission. The
objective of the Commission is to develop recommenda-
tions for a comprehensive statewide energy policy that
will serve the state over the next twenty years. The issues
which will be considered include the reliability of
Florida's clcctric and natural gas supply, emerging energy
supply and delivery options, industry competition, envi-
ronmental impacts, energy conservation, and the fiscal
impacts of energy supply options on taxpayers and energy
providers. Berg welcomes suggestions for references and
discussion topics. Technical Advisory Groups and
monthly meetings assist the Commission in gathering

PURC University of Florida
Warringtun College of Bus. Admin.
P.O, Box 117142
Gainesville, FL 32611
(352) 392-6148 tel.
(325) 392-7796 fax.
E-mail; purcecon(@dale.cba.ufl.edu
PURC Sponsors & Representatives
on the PURC Executive Committee:
BellSouth Tclecommunications Inc.
FL Municipal Electric Association
FL Municipal Power Association
Florida Power & Light Conmpany
Florida Power Corporation
Florida Public Counsel's Offce
Florida Public Service Commission
Gainesville Regional H ilities
GTE Florida
Gulf Power Company
Seminole Electric Cooperative, Inc.
Sprint/United Telephone of Florida
TECO-Peoplc's Gas
University of Florida

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