Deregulation of Electricity Takes Step Forward : Energy: Proposed rule requires utilities to publicly post prices they will charge generators.

The nationwide march to electric deregulation took a major step forward Wednesday when federal regulators unveiled their plan to clear away one of the biggest obstacles to competition: how to get the power from seller to buyer.

One big hang-up in the transition from a regulated industry has been the difficulty that power generators and customers have in making a deal for power that has to be transmitted through a utility’s high-tension lines--without knowing the price and terms of the transmission.

Though utilities since 1992 have been forced by federal law to transport power generated by third parties, each deal has been made in private and often only after that third party appealed to federal regulators to set the terms with the utility. The proposed rule, released in Washington by the Federal Energy Regulatory Commission, requires utilities to publicly post the price they will charge independent generators or other utilities for transferring power over their section of the nine regional power grids around the country.

Utilities will also not be allowed to mark up that price, as they have in the past. The tariff can be no more than the cost the utilities charge themselves in their own bookkeeping to move power across their section of grid.

“It starts the ball rolling,” said Steven M. Fetter, director of regulatory and governmental affairs at Fitch Investors Service Inc.

The utilities were relieved because regulators assured them that they would be compensated for their investments in power plants and transmission lines--even if some of these facilities must be shut down because they are uneconomical in an era of falling power prices.

“We cannot expect the utilities to be willing participants unless we ensure that their prudently incurred costs are recovered,” said FERC chair Elizabeth A. Moler in a statement. “That is the only fair way.”

The broad move cuts through a host of step-by-step changes that had been proposed by many in the industry. The commission estimates that only 21 utilities in the country had so far opened their transmission lines to competition, and that its order--if made final, after public hearings--would force 137 more to do so.

“It’s the first time that they have taken a lot of pieces that they’ve been working on and put them together in one large order, and in that it is sweeping,” said Mary Kenkel, spokeswoman for the Washington, D.C.-based Edison Electric Institute, the policy arm of the nation’s investor-owned utilities.

Kenkel said the utilities had long expected the transmission-access ruling but were pleased that the regulators would honor the financial promise of the traditional world of regulated utilities.

That “compact” was society’s agreement to buy electricity only from one utility, in exchange for that utility promising to build enough power plants and transmission lines to guarantee that everyone’s lights stayed on.

In the months after California regulators announced their intention to deregulate the industry, utilities in the state suffered dramatic stock-price drops--in part from the concern that the utilities would lose customers to new competitors and be left to pay for unneeded plants.

“If they hadn’t taken care of that, the credit-worthiness of the industry would drop tremendously,” said Edward J. Tirello Jr., senior vice president and utilities analyst with NatWest Securities in New York.