This lady seems to be the "mother" of deregulation.
This article was in the Nov 1994 Issue of Future Power, vol 1 number 2.
CALIFORNIA PUBLIC UTILITY
COMMISSIONER -PATRICIA ECKERT
Patricia Eckert was appointed to by California Public
Utilities Commission (CPUC) by Governor George
Duekmejian in March, 1989 and served as the
Commission's first woman President in 1991.
Patricia Eckert graduated Phi Kappa Phi cum laude
with a degree in business from Parsons College. She
then obtained a Juris Doctor degree from Loyola Law
School in Los Angeles.
The unique background that Ms Eckert brings to the
Commission includes classic corporate career
development in several Fortune 100 corporations -
consumer market research at Procter and Gamble and
executive marketing positions at the Dow Chemical
Company and its subsidiary, Bio-Science Laboratories.
One of the reasons she has a real sense for the consumer
is that she started her career with Procter and Gamble
as one of the original "Procter and Gamble Girls." There
were 60 women total who would receive telegrams every
other Thursday night notifying them as to where they
were to go for their next marketing survey. They
would assemble in teams of five to ten and actually go
out and talk to consumers face to face about their
products and their ideas on how to improve them.
They would then report their findings to the brand
manager. Being face to face with consumers gave
Patricia first hand experience with their knowledge
levels. She believes that consumers are not given the
credit they deserve.
The "Procter and Gamble Girls" were not allowed
marriage due to the extensive travel (on the
road 50 weeks per year). Patricia Eckert wanted
to marry her high school sweetheart. After two
years she did so and moved to Los Angeles where
she started to work for a clinical testing
laboratory called Bio-Science. She was on a
team that headed their market research and
advertising program. She attended law school
for four years at night, while working for Bio-
Science, and invested in real estate on the side.
When Dow Chemical bought out Bio-Science,
Patricia Eckert was transferred into the
mainstream of Dow. She was responsible for the
inside sales operations of the southern California
and Arizona region. Faced with the option of
moving to Dow headquarters in Michigan or
remaining in California, she opted to stay in
California and form a law partnership.
In 1982, Eckert established the Beverly Hills
law firm of Eckert & Colman. This firm
specialized in business transactions, real estate
and taxation. Her law practice expanded to
include complex federal litigation involving
United States defense contract matters. Owning
her own business enlightened her to the real
problem areas surrounding small businesses.
Payroll, workers compensation insurance,
liability insurance, office space, taxes, electricity
bills, phone bills, advertising costs, and
miscellaneous monthly office expenses were just
some of the obstacles encountered.
Commissioner Eckert has made significant
contributions to the re-regulation of energy at
both the state and national levels. She has
participated in the development of the National
Energy Policy Act through testimonials before
the committees of the United States Senate and
House of Representatives. She has been a force
in introducing competition into the natural gas
markets by working with the Federal Energy
Regulatory Commission.
Commissioner Eckert is a member of the
American Bar Association and the State Bar of
California. She and Norm Shumway are the two
members of the State Bar of California who serve
as CPUC commissioners. She serves as Energy
Vice Chairman for the American Bar
Association's Section of Administrative Law and
Regulatory Practice. She also has served on the
State Bars of California's Commission on Judicial
Nominees Evaluation. In 1987, Commissioner
Eckert was a gubernatorial appointee to the
Dispute Resolution Advisory Council.
Commissioner Eckert is the Chairman of the
National Association of Regulatory Utility
Commissioners (NARUC) Committee on
Administration. She is also a member of the
NARUC's Electricity and International
Committees, and the Western Conference of
Public Service Commissioners. In addition to all
her committee-ships, she also currently serves
on the Board of Directors of Rebuild Los Angeles
(RLA) and is active in the civic projects that are
helping to revitalize the Los Angeles inner city.
In our interview, Commissioner Eckert was candid
and informative. She had just returned from a trip
to London, England (personally financed) and was
able to share first hand experiences with us regarding
the United Kingdom (UK) Power Pool. She visited
with the head of operations of National Grid and
Power Gen, the traders and the large industrial users
group. After her visit she came to the conclusion
that there exists both "natural pools and unnatural
pools" from a market standpoint. The traders in
London said to let the natural pools develop based
on the market and the needs of the consumers.
When England began their power pool, bids where
placed by the power producers in order to rank
them in priority as to the dispatching of available
grid power. Surprisingly, when the bids were
submitted, almost 19 major power producers bid
zero so that their electricity would be sold first at
whatever price the power pool could obtain for
it. The secondary market thus was limited to
"contracts for differences" (CFD's) which are
tied to prices of the regulated pool. Only one
regulator of electricity exists in England. Listed
are some general perceptions resulting from
analysis of the UK electrical restructuring: I) the
transmission grids must be separated from the
generation companies 2) no one entity should
maintain dominance in the generation pool 3)
mechanisms for handling transactions " at the
edges" need to be developed 4) it is critical to
properly price transmission.
Accounting for balancing transactions " at the
edges" is illustrated in the following example: In
an unregulated market what is ordered and what
is supplied must be accounted for and balanced.
If one company orders 300 MW of electricity
but eventually uses 320 MW of electricity, that
additional 20 MW must be obtained form an
additional source. Even another customer could
be a source for that additional 20 MW. In
California "natural pools" can develop with proper
mechanisms for balancing the flow. "Natural
pools" should be allowed to develop in the market
place.
Over three years ago commissioner Eckert
suggested that the California commission should
look and learn from other countries regarding the
development of our own electric industry. We
are trying to create a more competitive electricity,
gas and telecommunications market and should
acknowledge other achievements as well as
problems in order to give insight as to what
direction we should be going. Look at some of
the positive accomplishments in England as well
Procter and Gamble's electricity bill is over $250
million per year alone. If you add in their
suppliers electric bills, you end up with an
industry consuming over $1 billion per year of
electrical services. Even a five percent reduction
in electrical costs would yield over $50 million
per year savings to that one manufacturer and its
suppliers. With those types of savings they
conceivably could expand, create new jobs, open
new markets, or even pass those savings on to
the consumers. General Motors is also a $1 billion
user of electricity. They have hired sharp
economic financial advisors to assist in controlling
the escalating costs of their electrical
consumption. Large users of electricity are having
to leave the state due partially to the high costs
of power here in California.
The most forward looking utilities and their
leaders have recognized that if they are a high
cost producer of electricity, they should find ways
to get out from under those expenditures that
attribute to the high costs. Other utilities across
the country are becoming much more attuned to
the needs of their users, listening intently to their
concerns and making adjustments to ease the
power pricing.
When talking about sunk costs and stranded costs
and how will they be absorbed, Commissioner
Eckert appropriately paraphrased Walt Whitman
"If we stand on the shoulders of the giants that
have come before us, we can get some perspective
of what might be coming in the future." If we
look at the way that natural gas was deregulated,
it could present a model for the CPUC to follow
in determining how the competitive transition
costs (CTC's) are allocated.
The qualified facility (QF) contracts are the most
complex aspect in trying to sort out the CTC's.
The problem that the CPUC got into with the
ISO4's is that the avoided costs were based on
forecasts of future oil prices. Now, in order to
relieve the costs of those contracts, the future
costs of natural gas must also be weighed. Few
have factored in the fact that natural gas costs
could escalate significantly in the future due to
any number of circumstances. At what point do
we know what stranded costs will be? The answer
will lie in long term forecasts which are invariably
wrong.
Commissioner Eckert's current focus has been in
overseeing California's comprehensive review of
the electric industry restructuring. She also
focuses her energy on the enhancement of
California's competitiveness within a global
telecommunications infrastructure. She speaks
extensively on telecommunications regulations
and has addressed the European Community DO
XIII audiences on the subject.
Commissioner Eckert believes that the "invisible
hand of the market" is far better than old style
command and control regulation. The types of
markets and their respective development will be
based on the decisions and policy of the CPUC
in the upcoming months. Everyone is reminded
that the commission is still taking comment in a
wide number of public forums and at this stage
the blue book remains a proposal. More than
anything, it is the market place that is forcing the
electric industry to restructuring. To quote
commissioner Eckert, "The competitive genie is
out of the bottle." |
