Title: PURC review
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Permanent Link: http://ufdc.ufl.edu/UF00091019/00002
 Material Information
Title: PURC review
Series 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.
Publication Date: Fall 2001
 Record Information
Bibliographic ID: UF00091019
Volume ID: VID00002
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 PURCa Vol.

2001 -4 9


.., UNIVERSITY OF
FLORIDA

Thanks to our sponsors and friends, the Public Utility Research Center is able to conduct programs
that 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.


POLICY ANALYST JOINS PURC



Lynne Holt, formerly with the Kansas Legislative Research
Department (KLRD), began a joint appointment in August 2001 with
PURC and the University of Florida's Askew Institute on Politics and
Society. Dr. Holt has more than twenty years experience in public
policy formulation and research. At the KLRD, she prepared a wide
variety of utility-related and economic development studies for review
by the state House of Representatives, Senate, and special legislative
task forces. Prior to that, she worked as an Energy Research Analyst at
the Kansas Corporation Commission, making written and oral
presentations on energy conservation and utility regulation. Her
knowledge extends to economic development, budget analysis,
telecommunications strategy, commerce, technology, and public utility
(electricity and natural gas) regulatory policy issues. Dr. Holt obtained
her Master's and PhD degrees in German from Harvard University Lynne Holt
(1974, 1978) and a Master's in Public Administration from the
University of Kansas (1985).
At PURC, she has begun to assist Sanford Berg in writing a series of articles on how the design of new
independent regulatory commissions affects the performance of the water sector in a country. The first article,
"Consumers Pretend to Pay and Utilities Pretend to Supply Good Service: Breaking the Poor Performance
Syndrome," describes the fundamental issue underlying water sector reform among nations today: how to
constrain political opportunism, and outlines how customers and utilities can benefit from sound regulatory
processes. A second article, "Investments Delayed, Service Denied: Regulatory Functions and Sector
Performance," focuses on the tools needed by regulators to promote good water utility performance. These
articles will appear in Water21, the publication of the International Water Association, over the next year.
Given the importance of this infrastructure sector, close examination of pricing, investment, incentives, and








Calendar of Events for 2001-2002

PURCAnnual Conference Regulation/Deregulation: It's Performance that Counts
February 21-22, 2002 UF Hotel and Conference Center, Gainesville
Leading experts will address energy and telecommunications issues confronting Florida and the Contact:
nation. Past keynote speakers have included Roger Noll, Jean Tirole and Jean-Jacques Laffont, Alfred Kat Wordei
Kahn, Irwin Stelzer, and Harry Trebing. A roundtable discussion of regulatory issues by commissioners ..-392-
from the Florida Public Service Commission will highlight the first day. The second day will offer '1"1
concurrent sessions on energy and telecommunications topics.

Registration information will be mailed in January 2002; you may also visit our web site at:
www.purc.org (click on the "Conferences, Seminars" link)

Contact: Competition in Wireless: Spectrum, Service, and Technology Wars
Mark T, iii-, ,, IFebruary 19-20, 2002 UF Hotel and Conference Center, Gainesville
: 2-392-2929 Co-sponsored by PURC, UF Center for International Business Education and Research,
Public Policy Research Center, and the London Business School (LBS), this conference
will present the latest research on competition in telecommunications, focusing on
competition brought about by new wireless technologies. Papers by leading researchers from the University of
Toulouse, American Enterprise Institute, LBS, and UF will be presented. Representatives of the Federal
Communications Commission, state and international regulatory agencies, and industry will participate in
discussions.


Eleventh PURC/World Bank International Training Program on Utility Regulation and Strategy
January 14-25, 2002 UF Hotel and Conference Center, Gainesville
PURC will conduct a two-week program on utility regulation and strategy for countries Contact:
undertaking infrastructure reforms in electricity, gas, telecommunications, and water utilities. To date, Pascale Parker
this program has successfully trained nearly 900 participants from more than 100 nations. In addition, or
short-term study visits to PURC are organized for international agencies whose members are unable \ i-._11.,
to attend the longer program.
N. V|-7


Projects and Research I


Energy 2020 Update
-.i-,....I cP.cr- is a member of Govemor Bush's Energy 2020
Study Commission. He describes the process as being fairly
exhaustive and exhausting. The Final Report will be assembled in
Tallahassee, and the first draft will be commented upon by
stakeholders and commission members. When asked whether
significant policy initiatives should be made in the absence of a
crisis, Berg responded,

This is the best time to take steps that promote energy
efficiency and reliable supply while preserving Florida's
fragile environment. Crises seldom yield sensible long-
term policies.
Those interested in the Final Report should monitor the Study


Training Workshops
for FPSC Staff


PURC presented two workshops in Fall
2001 for staff at the Florida Public
Service Commission in Tallahassee. The
first day (for new staff),"Principles of
Regulation," focused on incentive issues,
costing and pricing principles, and
technology. The second day, "Regulatory
Process under the Law," addressed market
structure and corporate behavior, sector
policies and their impact on industry
performance. PURC has conducted
similar outreach workshops in previous
years, including a three-part series on
energy issues, and presentations on
telecommunications costing and pricing.








Recent Publications from PURC
Visit our website at www.purc.org for a complete listing ,f PURC i ,1 ,I ,.,1 i, ,!


"Infrastructure Regulation: Risk,
Return, and Performance"
--,in..i..I V. Pcr-_'s article targets
issues raised by the creation of new
regulatory commissions and outlines
principles that are relevant for any
agency. It provides an overview of
regulatory design (governance and
processes), incentives, and the
determinants of sector performance.
Global Ul1 I ,, 2001.

"Business Iqmeralives "%
Mark T.,ri-..,'i chapter in "The
New Global Telecommunications
Industry and Consumers," a report by
Penn State University's Institute for
Information Policy (ed. Jorge
Schement, University Park,
Pennsylvania: 2001), provides a new
perspective on the
telecommunications industry and
infrastructure development.

"Rivalry Through Alliances: Com-
petitive Strategy in the Global
Telecommunications Market"
Mark Tnnli-,,ri (co-authored with
Sylvia Chan-Olmsted, UF
Department of Telecommunication)
examines the forces that have
contributed to the globalization of
telecommunications services, the
major strategies/strategic alliances in
the global telecommunications
market, and the factors that have


"Regulatory Evolution, Market
Design, and Unit Commitment"
Paul Sotkiewicz (with R.
O'Neill, U. Helman, M. Rothkopf,
and W. Stewart, Jr.) reviews the
recent history of short-term electric
power market development in the
U.S., where the unit commitment
problem has become a major
component of some centralized
market designs as the algorithm for
ensuring reliability and determine
spot market prices. The paper
identifies and analyzes successes
and problems, and develops
principles for the next generation
of unit commitment oriented
electricity spot markets. In The
Next Generation of Electric Power
Unit Commitment Models, (B.
Hobbs, M. Rothkopf, R. O'Neill,
and H. Chao, editors).

"Equilibrium Prices in Auction
Markets with Non-Co iinvexities "
This paper by Sotkiewicz (with
R. O'Neill, B. Hobbs, W. Stewart,
and M. Rothkopf) provides a
potentially large step forward in
the design of electric power spot
markets, and other markets in
which discrete or lumpy decisions


must be made by players in the
market. They find economic
interpretation of strong duality for
integer programs that allows for the
existence of a set of market clearing
prices. The markets that motivate
the analysis are electric power
markets in which non-convexities
(or lumpiness) arise from the
operating characteristics of
generators; however the results
presented are general and can be
applied to other markets in which


"Price Regulation and Incentives '
David ,li.i-1._.l r.1's paper will
appear as a chapter in the Handbook
of TL /LL. ',,,ui ra ,i I, i Economics
(M. Cave, S. Majumdar, and I.
Vogelsang, eds). The author reviews
the variety of incentive regulation
regimes that have become more
popular in the telecommunications
industry in recent years, assesses the
potential advantages and
disadvantages of these regulatory
regimes, and examines their impact
on the industry. Sappington is
currently serving as Chief
Economist at the Federal
Communications Commission in


Visiting Researchers


_________________________________________________ 1! _______________________________________________________________________________________________


The 2001-02 academic year brought two new
researchers to PURC and the Warrington College of
Business. Dr. I i.,iii.1diii 'i I is a Fulbright Scholar
from China pursuing research in utility competition
and regulation. He is a Professor of Economics and
Dean of the School of Economics at Shandong
University, Jinan Province. His interests focus on new
institutional economics and industrial organization
theory. While at UF, he plans to conduct comparative
research on the reform of state-owned enterprises and
national utilities in China and the U.S.


Ms. Pinar D.1., I (Turkey) is a fourth-year PhD
candidate in economics from the Universite des
Sciences Sociales de Toulouse, France. She has
published "Regulation and Innovation in the
Telecommunications Industry" (TL I ,,i liiI I,,i,
Policy, 2001) and has experience at France Telecom.
Her research interests include industrial organization,
network economics, and competition policy.
These researchers continue a PURC tradition of
promoting the exchange of ideas across national
boundaries.








,ePURC


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


SResearch Update



Materials developed by PURC researchers are being brought
to the Warrington College classroom, and subsequently to
outreach venues. Paul Sotkiewicz's experience with electricity
restructuring and markets in California provided the foundation
for presentations at the University of Cape Town in South
Africa (September '01) and Brazil (August '01) on electricity
sector reform. He is applying these materials to his Fall course
on "Government Regulation of Business" at UF and to his
work on the Wholesale Technical Advisory Committee of the
Energy 2020 Study Commission.
Mark T rii i-. .1 developed case studies on telecommunications
competition including interconnection disputes, the role of
regulatory commissions, and monitoring for market
performance. He presented the cases at workshops in Hong
Kong, Panama, and Ireland over the summer. He draws upon
these experiences for his UF classes on national and
international telecommunications policy.


PURC University of Florida
Warrington College of Bus. Admin.
P.O. Box 117142
Gainesville, FL 32611
352-392-6148 tel; 352-392-7796 fax
E-mail: purcecon@dale.cba.ufl.edu
http://www.purc.org
Sponsors and Representatives
on the PURC Executive Committee:
BellSouth Telecommunications, Inc.
FL Municipal Electric Association
FL Municipal Power Association
Florida Power & Light Company
Florida Power Corporation
Florida Public Counsel's Office
Florida Public Service Commission
Gainesville Regional Utilities
Gulf Power Company
Seminole Electric Cooperative, Inc.
Sprint/United Telephone of Florida
TECO-People's Gas
University of Florida
Verizon Communications




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