ROANOKE TIMES
Copyright (c) 1997, Roanoke Times
DATE: Sunday, January 5, 1997 TAG: 9701070023
SECTION: BUSINESS PAGE: 7 EDITION: METRO
TYPE: ECONOMIC FORECAST
SOURCE: GREG EDWARDS STAFF WRITER
Consumers and shareholders of the region's utilities should begin this year to see the benefits of government deregulation and new technologies.
Long-distance carriers, cable television companies and other new entrants will start competing with regional phone companies for local phone business. Regional phone companies, in turn, will accelerate their plans to compete by selling long-distance-telephone and cable-television services.
An explosion of new telecommunications markets has been brought about by customer demands, advancing technology, the Internet and a new competitive industry structure created by congressional passage of the Telecommunications Act of 1996, according to Bell Atlantic Corp. Chairman Ray Smith. He made the comment in a late October speech to the Bear Stearns Media and Communications Conference in Phoenix.
The new opportunities are in four areas, Smith said: households with multiple communications lines, long-distance service, video services and electronic publishing and commerce.
In 10 years, Bell Atlantic sees a potential for $3 billion in new revenues from households adding new phone or data lines to their existing service. That compares with an existing $4 billion revenue base created by the same households.
Companies that move quickly to establish themselves will do best in this new market for Internet, video-conferencing and on-line commercial services, Smith said.
Long-distance calling is a $21 billion market that Bell Atlantic will enter in 1997 with hopes of capturing a 30 percent share in five years, he said.
Bell Atlantic also will expand its $1.1 billion Yellow Pages business into electronic publishing, expecting to attract dollars away from alternative media and to expand the advertising pie, Smith said. Neither the long-distance business nor electronic publishing will require large capital outlays by Bell Atlantic, Smith said.
Finally, his company's pilot project of video-on-demand service in Northern Virginia has shown that customers want and are willing to pay for inter-active video. Customers bought video-on-demand at a rate 12 times greater than for pay-per-view cable, because of the choice and convenience it offers, he said.
Bell Atlantic, which merged with Nynex in 1996, will "hit the ground running in 1997," Smith said. With 25 percent of the U.S. market, the company is ready to capitalize on a changing industry, he said.
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In the electric utility industry the growth may be less vibrant, but consumers will benefit from the battle among companies seeking a bigger share of the energy market.
Increased awareness of the benefits of energy conservation and efficiency means total demand for electricity is expected to grow more slowly than the economy as a whole over the next two decades, the U.S. Energy Department says. American Electric Power Co.'s 1997 Virginia business forecast reflects that industry trend.
Dan Carson, AEP's Virginia president, said the company expects kilowatt hour sales and peak demand to grow in the 2 percent range. Government and private economists say the U.S. economy may be expected to grow at a 2.2 percent rate this year, with Virginia's economy, perhaps, doing a little better than that.
Electricity sales depend basically on two factors - the weather and economic growth, Carson said. Last year was a good one for AEP in Virginia, he said.
Although a colder-than-normal winter at the start of 1996 was offset by a cooler-than-normal summer, dampened demand because of weather was offset by economic development in Southwest Virginia, Carson said. AEP increased its kilowatt hour sales 3 percent in 1996, he said.
The electric power industry is undergoing restructuring and the emergence of competition on the consumer level because of government deregulation. Competition on the wholesale level was ushered in by the 1992 federal energy bill, but retail competition is in the hands of state utility commissions - and some are moving faster than others.
Although the Virginia General Assembly and the State Corporation Commission are studying retail electric competition, Carson said he doesn't expect it to become a reality in Virginia this year.
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Nationwide consumption of natural gas is expected to exceed its 1992 historic high of 22.1 trillion cubic feet in 1997, the Energy Department said. Consumption is expected to increase steadily through the end of the forecast period in 2015.
Electric utilities are expected to account for the largest increase in natural gas consumption, the government said. Residential, commercial and industrial use of gas will grow more slowly, at a rate of 1.1 percent annually or slower. And after 2003, expect to see a rapid increase in the use of natural gas as a vehicle fuel.
Roanoke Gas Co. is budgeting for an increase of 1,300 to 1,400 natural-gas customers in 1997, said John Williamson III, vice president for rates and finance. The company also expects to add 2,000 customers at its propane subsidiary this year, he said.
The company is budgeting $5.8 million for capital improvements compared with a capital budget of $5.1 million last year, Williamson said.
LENGTH: Medium: 95 linesby CNB