Way Eases for Power Utilities to Enter Telecom

Federal regulators moved Thursday to make it easier for gas and electric companies to get into such telecommunications fields as cable TV and the telephone business.

The new rules, approved unanimously by the Federal Communications Commission, will ease the way for public power utilities to use their vast in-house communications networks--which often run alongside existing phone and cable lines--to transmit phone and TV signals and offer other telecommunications services.

Several power utilities, including Southern California Edison Co. and Pacific Gas & Electric Co., have already taken steps to enter the telecommunications business. The FCC’s action gives the same right to utilities whose service areas cross state lines.

The FCC rule change is the final step needed to implement the wishes of Congress, which earlier this year passed a sweeping telecommunications reform bill that lifted the telecommunications restrictions that had been imposed on utility companies by the 61-year-old Public Utility Holding Company Act.

The rule change is expected to ignite a wave of new investment in telecommunications by the $200- billion power industry, which itself is in the midst of radical change as it loses monopoly status and faces new competition in providing electric power.

The power industry has more than 10,000 miles of coveted fiber-optic cable in place with the capacity to carry millions of phone calls

and hundreds of cable channels, as well as to provide internal communications and equipment monitoring for the utility companies. Utilities also have millions of captive customers on their billing networks.

“There is a whole lot of interest among utility companies to enter the telecommunications business,” said Dan P. Rudakas, a utility company analyst with Everen Securities in Chicago. Because their operations don’t cross into other states, Edison, PG&E;, Virginia Power and other utilities have been exempt from PUHCA restrictions and had already begun to explore telecommunications investments.

Edison, for instance, agreed earlier this year to lease 1,258 miles of fiber-optic cable to a Colorado-based telecommunications company for between $75 million and $100 million. The firm, Intelcom Group, plans to offer local phone service to Southern Californians.

PG&E; is conducting a home energy management trial with cable giant Tele-Communications Inc.

The new FCC rules will level the playing field for all power utilities. Now subsidiaries being sought by power companies need only file a brief description of their planned telecommunications activities with the FCC, without having to seek further federal regulatory approval.

Thirteen utility subsidiaries have such deals pending and are now free to complete them.

“Today we unchain the public utility companies,” FCC commissioner Susan Ness said.

Among the companies first out of the gate are Central and South West Corp., a Texas utility company, and the New Orleans-based power company Entergy Corp., which just last week announced it intends to acquire a major electronic burglar alarm company as part of a foray it plans into the communications technology business.