Title: PURC review
Full Citation
Permanent Link: http://ufdc.ufl.edu/UF00091019/00004
 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: Spring 2004
 Record Information
Bibliographic ID: UF00091019
Volume ID: VID00004
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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Thanks to our sponsors and friends, the Public Utility Research Center continues to provide programs that
are mutually beneficial to the energy, water, telecommunications, regulatory and academic sectors.

When is Competition the Regulator?

s Voice over Internet Protocol
(VoIP) the technology that
launches the next generation of
phone services? Or is it simply a
way to bypass telephone access
Regardless of how you view it,
VoIP using Internet networks to
carry traditional voice telephone
calls is attracting a lot of attention
in telecommunications policy circles,
as participants learned at the Public
Utility Research Center Annual
Conference in February.
The conference generated much
debate and considerable consensus.
Dr. Robert Pepper, Chief of Policy
Development at the Federal Com-
munications Commission (FCC),
opened discussion on VoIP with an
explanation of the pricing dilemma
facing regulators, the industry and
Dr. Pepper noted that regulated
prices for calls received by local
telephone networks range from
several cents per minute for interna-
tional and some in-state long-
distance calls to about one cent
per minute for interstate long-
distance calls to perhaps one-tenth
of one cent per minute for local
calls. These discrepancies exist even
though there are essentially no
technical differences in the ways
local telephone networks handle

these calls.
The session provided a timely
discussion of the issues, given the
FCC's initiatives on VoIP and
telecommunications pricing and
Florida's recent efforts to lower
access charges. Read more about this
issue through the Publications link at

Energy Restructuring

The electricity sector in the U.S.
is at a crossroads, according to Dr.
Diana Moss, who spoke at an annual
conference session that examined
challenges to a comprehensive policy
on electricity restructuring. Dr.
Moss, Vice President and Senior
Research Fellow at the American
Antitrust Institute in Washington,
D.C., argued that reliability issues, as
well as political barriers, are major
challenges to restructuring on a
national level.
She questioned whether policy
standardization had become exces-
sive to the point of inhibiting
competition in distinctly regional
markets, and if certain federal
policies were also failing to promote
competition along these same lines.
She concluded with suggestions
for moving forward, including
identifying and enforcing abuses of
market power in the industry and

Annual Conference attendees listen as
Vonage Chief Financial Officer John
Rego discusses the family of applications
and platforms using Internet Protocol.

encouraging structural remedies. Her
presentation can be found through
the PURC Annual Conference link
at www.purc.org.

PURC Honors Elizabeth

Professor Elizabeth Bailey of the
University of Pennsylvania's
Wharton School was presented the
2004 Distinguished Service Award at
the Annual Conference in February.
The award recognizes Dr.
Bailey's contributions to understand-
ing the interplay of economics and
politics in determining regulatory

continued on page 2



Policy is Dangerous Work
Mark A. Jamison, Ph.D., PURC Director of Telecommunications Studies

Ron Heifitz and Marty
Linsky, authors of Leader-
ship on the Line, coined the
phrase, "Leadership is dangerous
work," because people exercising
leadership suffer if they fail to
recognize the risks inherent in their
It seems fair to say that infra-
structure policy is also dangerous
work, because the making of com-
munications, energy, or water policy
contains many opportunities to
stumble or fall victim to circum-
Some cases in point: After three
years of political debate, the U.S.
Supreme Court is now considering a
case about who-talked-to-whom
while the Bush Administration was
creating its energy policy.
The U.S. Congress debated
updating the 1934 Communications
Act for 11 years before passing the
Telecommunications Act of 1996
and now the implementation of this
act has been the subject of more
court cases and congressional

continued from page 1

decisions and the performance of
regulated firms. Her research on
contestability has contributed to
deregulation initiatives in several
Previous award recipients can be
found at www.purc.org. To nominate
an individual for the 2005 award,
e-mail Mark Jamison at
mark.jamison@cba.ufl.edu. 9-

debates than I would care to count.
On the international side, a
regulator in Eastern Europe denied
an electric utility a price increase that
was required by law and investors
pulled out of the country. In Africa,
an electricity regulator did the
opposite he approved a price
increase, also required by law, and
was promptly fired by his country's

The key is to manage the

political context within which

technology policy issues

are hammered out

and implemented.

Why is infrastructure policy so
dangerous? Communications policy
is critical in an information-based
economy and an information society,
but it pits large, conflicting eco-
nomic interests against each other.
Energy policy involves hard trade-

Above, PURC Director Sanford Berg,
right, presents the 2004 D1, , iii hi, ..
Service Award to Dr Elizabeth Bailey
during the Annual Conference.

offs between economic growth,
consumer affordability, the environ-
ment and international affairs, each
with its distinct interest groups.
Water policy is central to numerous
environmental policies, but it digs
into everyone's pocketbook and
affects where economic growth
occurs, namely in Florida.
How should we deal with this?
The key for the person exercising
leadership in infrastructure policy -
whether he or she is in industry,
government, academia or elsewhere
- is to manage the political context
within which technical policy issues
are hammered out and implemented.
Managing the political context
+ maintaining substantive links
with their supporters;
+ understanding what their
adversaries are saying;
+ monitoring the temperature
of the debate;
+ identifying common ground;
+ and asking "What happens
next?" at each step, just to
name a few.
There are no guarantees of
success it may be that the regulators
and policy makers cited above did
everything to the best of their abilities
- but that possibility only underscores
the notion that "Infrastructure policy
is dangerous work." 9-

PURC strives to help stakeholders in
energy, communications and water policy
develop and implement effective policies.
We'll continue to keep you informed
;ih,. ,,iJ additional public forums,
executive education programs and
publications, as we help you toward
success and learn from your feedback.

2 www.purc.org

Research News

n January, PURC Director of
Energy Studies Paul Sotkiewicz
received the American Eco-
nomic Association Transportation
and Public Utilities Group's Annual
Dissertation Award in Utilities for
his dissertation on "The Impact of
State-Level Public Utility Commis-
sion Regulation on the Market for
Sulfur Dioxide Allowances, Compli-
ance Costs, and the Distribution of
Dr. Sotkiewicz's paper on
"Efficient Market Clearing Prices in
Markets with Non-Convexities" is
forthcoming in the European Journal
of Operational Research.
Dr. Sotkiewicz is collaborating
with J. Mario Vignolo, an engineer
affiliated with the energy regulator in
Uruguay (URSEA) and a graduate
of the 2003 PURC/World Bank
International Training Program on
Utility Regulation and Strategy. Mr.
Vignolo visited PURC this April to
continue their joint research address-
ing capital cost recovery, the impact

Activities Update

of intermittent distributed resources,
and the potential savings from
reducing the need for upgrades.
PURC Director Sanford Berg's
paper on short-term initiatives
implemented by the Ugandan
National Water and Sewerage
Corporation was written in collabo-
ration with two associates from
Uganda's Makerere University,
Gaddi Ngirane Katashaya and Silver
Mugisha, a graduate of the 2002
PURC/World Bank training pro-
gram. The paper, forthcoming in the
June 2004 issue of Water 21, the
magazine of the International Water
Association, can be found online at
Two other PURC papers are
under review at scholarly journals:
one on telecommunications policy
(applied to China) and another on
electricity distribution efficiency of
public and private utilities (applied
to Ukraine).
PURC Executive Director Mark
Jamison and PURC staff are con-

Need to know how many
barrels of crude oil were
produced at Bear Island
Field in South Florida in 2001? (The
answer is 179,102!) How about the
minimum customer charge on
electric rates imposed by the munici-
pal utility in Mount Dora compared
to the Sumter Cooperative? These
data and more are found in the
pages of the F ..* StatisticalAb-
stract, published annually by the
Bureau of Economic and Business
Research (BEBR) at the University
of Florida. Visit www.bebr.ufl.edu.

tinuing work with researchers from
the Universite de Toulouse and
Pontificia Universidad Catolica del
Peru in preparing a Body of Knowl-
edge (BoK) for utility regulation.
The material is designed to assist in
the training of regulatory profes-
sionals. When completed, the BoK
will serve as a valuable resource for
educational programs and as refer-
ence material for commissions and
companies. This project is funded by
the World Bank.

Training and Development

PURC provides the delivery
of customized training
programs that address
specific industry needs and regula-
tory concerns for small groups in
public, private and nonprofit organi-
zations in the U.S. and abroad.
This spring, Dr. Jamison pre-
sented a technical program in Abuja,
Nigeria for the Nigerian Communi-
cations Commission (NCC). The
workshop on the economics of
regulation, competition, intercon-
nection and universal access was
attended by 17 economists, engi-
neers and attorneys from the NCC.
PURC Associate Rich Gentry, a
doctoral student in Management at
the University of Florida, led ses-
sions on the use of models and
other economic tools to examine
market competition and anticom-
petitive conduct.
Dr. Jamison also traveled to
Kampala, Uganda, to deliver a
training program on price reviews,
cost studies and interconnection in
telecommunications. Photos and
details about these training courses
are available at www.purc.org. '-

www.purc.org 3


Warrington College of Business
P.O. Box 117142
Gainesville, FL 32611-7142

June 7- 18, 2004

16th PURC/World Bank
International Training
Program on Utility
Regulation and Strategy

University of Florida
Conference Center,

For more information,
call Virginia Hessels at

Wed., September 29, 2004

PURC Fall Roundtable
"Is the Tail Wagging the Dog in
Communications Policy?"

Topics to be addressed include
the effect of competition on
telecommunications services and
user groups, customer demand,
legacy public policies, technology
changes in the communications
sector, uncertainty in national
policies, and mergers and

Tallahassee-Leon County Civic
Center, Tallahassee, Florida
Registration: $75
(includes lunch and materials)
Register online at www.purc.org
or call 352/392-3655.

Sponsors and Representatives on
the PURC Executive Committee:

BellSouth Telecommunications, Inc.
Florida Municipal Electric Assoc.
Florida Municipal Power Agency
Florida Office of Public Counsel
Florida Power & Light Company
Florida Public Service Commission
Gainesville Regional Utilities
Gulf Power Company
Progress Energy Florida
Seminole Electric Cooperative, Inc.
Sprint-Florida, Inc.
University of Florida

Public Utility Research Center
Web site: www.purc.org
E-mail: purcadmin@cba.ufl.edu
Ph: 352/392-6148
FAX: 352/392-7796









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