FUTURENET'S PLUG PULLED IN NEVADA.

Byline: Richard N. Velotta Las Vegas Sun 

A Valencia company under federal investigation in California has been ordered to cease business as an independent electrical power company in Nevada.

Kelly Jackson, staff counsel for Nevada's Public Utility Commission's regulatory operations staff, has sent letters telling Future Electric Network of Valencia - known as FutureNet - and Boston-Finney, a Harrisburg, Pa.-based company, to provide verification to the state that they had shut down.

A spokesman for the PUC said the two companies' bids to develop electricity distributorships sound too much like pyramid schemes, the illegal marketing ploy in which early investors make money by recruiting more investors rather than selling products, a spokesman for the state's PUC said Monday.

Company Chairman Alan Setlin couldn't be reached for comment late Monday. But Setlin has said in the past that accusations by the Federal Trade Commission are without merit. The FTC shut down FutureNet earlier this month alleging the company was running a pyramid scheme with residential electricity marketing in California.

The Public Utilities Commission of Nevada is still about 21 months away from having criteria in place for the licensing of service providers. But that hasn't stopped companies such as FutureNet and Boston-Finney from setting up shop in the state, recruiting sales forces and customers.

Boston-Finney, a company whose president is a teen-ager, and FutureNet, which was sued by the Federal Trade Commission last month, also are in trouble in California, where competitive power sales are due to begin March 31 following a three-month delay from the initial start-up date.

The California PUC revoked Boston-Finney's registration as an electric service provider and ordered its president, Christopher Mee, who regulators say is 19, to clearly state his involvement in any future state applications.

A federal judge in Los Angeles issued an injunction against FutureNet's sales activities, froze the company's assets and appointed a receiver while an investigation was conducted on an alleged pyramid scheme. A judge, at the request of the company, has since allowed the FutureNet's 200 employees to return to work and collect overdue paychecks.

While keeping a watch on companies jumping the gun to sell electricity and distributorships, the Nevada commission and its staff is joining with Nevada Power, consumer activists and an army of interested business people to develop the ground rules for turning one of the last great monopolies into a free-market environment.

Although not mandated by federal legislation, the restructuring of the power industry is well under way in 38 states, including Nevada. Gov. Bob Miller signed Assembly Bill 366 in July, restructuring the industry, turning the responsibility of the details over to the PUC, which is mandated to have a plan in place by December 1999.

Under the legislation, the two investor-owned incumbent utilities, Nevada Power and its Northern Nevada counterpart, Sierra Pacific Power Co., must give competitors free and equal access to their power lines. If those companies decide to provide service in the competitive arena, they'll have to do it through an affiliate.

All the other details are being hammered out in a lengthy series of workshops, hearings and rulings discussed by representatives of existing utilities, prospective competitors and the regulators at the PUC.

Commission Chairwoman Judy Sheldrew said while the various parties work to implement change, consumers will be apprised of what's on the horizon.

Sheldrew stressed the change is a restructuring of the industry - not deregulation.

``I think it's important for us to clarify that how well this works depends on how many competitors come into the market,'' Sheldrew said. ``The captive customer can't be put at risk.''

Sheldrew explained that keeping the regulatory overview in place is important because it allows the PUC to keep an eye on the operational and financial fitness of the companies hoping to do business in the state.

``We'll have the ability to look at their behavior in other states,'' Sheldrew said of the companies eyeing Nevada.

Explaining how the change will affect customers comes under jurisdiction of consumer outreach coordinators on both ends of the state. In Las Vegas, it's David Chairez who will have the challenge of not only knowing and understanding the restructuring, but explaining its complexities to Nevadans who have lived with power monopolies all their lives.

Chairez plans a grass-roots campaign to explain the changes with appearances before service clubs, in community forums and in other public settings. He's also developing written materials and a Web site to explain changes and will operate a toll-free phone line to field questions.

How will electrical service be different in Nevada after the restructuring? Regulators aren't exactly sure. However, the increase in the number of competitors is expected to generate a multitude of ideas.

Consumers still will be able to plug in their appliances like they always have. The power and delivery won't be any different - there won't be competition in the transmission system itself.

However, new competitors may be able to provide different rates for different hours of the day. Many of the new competitors will simply buy power in bulk from existing utilities, slap a different rate structure on it and resell it to consumers.

Lower rates no longer can be reserved strictly for off-peak hours. Some companies might be able to offer innovative metering technology to cut costs. Others could offer options as to what day of the month they want meters read or bills to be issued.

Sheldrew suggested that new competitive alliances could develop as a result of the restructuring. Some power companies, for example, could hook up with airlines and offer frequent-flier mileage for every dollar spent for electricity, just as some do with telephone utilities.

Other companies might market themselves as leaders in alternative-fuel technologies. Consumers who want to buy from companies at the forefront of the development of solar power would be able to do so. One of the responsibilities of the PUC will be to monitor whether the companies that claim to generate power through alternative fuels comply.

In the meantime, the principals involved in making the conversion from monopoly to competition are carefully outlining what services should be competitive and how to price them.