302 Commonwealth Energy System remain regulated. Gas and electricity businesses will represent the fran chise and contain only those activities that must be managed in the regu lated format. They will capitalize on the unrealized potentials within the existing franchise. These two units will report to an internal board of directors. As core businesses, they will be fully autonomous units. They will have control over all of the activities necessary to help them exploit the full potentials of the franchise. The units will fully abide with all the laws and require ments pertaining to regulated energy distribution. The core businesses, gas distribution and electricity distribution, will provide COM/Energy's stability. For the foreseeable future they will be the infrastructure necessary for developing other units of the value chain. These business units will have the responsibility and the challenge of fur ther identifying, containing, and dissolving their mess. Each will become a model of an efficiently managed distribution business in a regulated industry. 13.5.1 Customer-oriented Business Units: energy Supply Systems and management Services The customer oriented business units, energy supply systems and energy management services, will constitute the second output dimension of COM/ Energy's value chain. They will operate outside the regulated environment. The experience that COM/Energy has gained as a gas and electric hold ing company provides it with a unique understanding of customers' needs, which can be met by combinations of energy products and services. With the full support of the gas and electric segments, COM/Energy will develop a wide range of energy products and services to complement its traditional offerings. These services will encompass industrial/commer cial cogeneration, packaged cogeneration, operation and maintenance of existing generation, and residential/commercial energy management services. 13.5.2 Cogeneration and packages of energy Supply (industrial and Commercial) With regulatory reform and rapidly escalating energy prices during the 1980s, the application of cogeneration to meet energy requirements became increasingly common. Throughout the United States, cogenera tion now represents nearly 10% of total electricity production -- in New England, cogeneration represents greater than 10% of electricity genera tion. In recent years, cogeneration activity has been expanding rapidly. From 1988 to 1992, total electricity generation in the United States increased 7.9% while cogenerated electricity increased 74%. By 1992, the total market for cogeneration had reached roughly $4 billion. Cogeneration applications can provide customers with a payback of 1­4 years and a return on investment of roughly 15­30%.