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Fortnightly Magazine - February 1 1995

Perspective

Thomas P. Weil, PhD

The meltdown of the Clinton health reform plan suggests a return to competition-that managed care, capitated payment, and regional alliances will assume leading roles in the delivery of health service. But that conclusion may prove premature. Missing from the debate is a discussion of the true costs and implications of these emerging health alliances and health management organizations (HMOs).

Managed care may not offer the expected panacea for containing health costs.

Zoning Change Raises EMF Concerns

Phillip S. Cross

The Rhode Island Supreme Court has ruled that the state commission did not err when it refused to reverse a decision by the Town of Portsmouth to rezone certain property from industrial to residential. Newport Electric Corp. had protested that the change could make it liable to EMF damage claims because of overhead power lines in the area.

Tax Corner

Keith Martin

Developers of independent power projects in foreign countries often try to set up the local-owner company to qualify as a partnership for U.S. tax purposes, even if the company is a corporation in the eyes of its government. This strategy enables the developer to defer U.S. taxes on his earnings from the project for as long as he is willing to keep the earnings abroad.

Under new IRS guidelines (Revenue Procedure 95-10) issued January 17, 1995, a foreign company qualifying as a partnership must have at least two shareholders.

NC Supreme Court Settles Avoided-cost Dispute

Phillip S. Cross

The North Carolina Supreme Court has upheld state regulators' decision to reprice payments made by Virginia Electric and Power Co. (Vepco) to Ultra Cogen Systems, a qualifying facility (QF), for power purchased under avoided-cost contracts approved by Virginia's commission. The North Carolina Utilities Commission (UC) had disallowed $1.39 million in capacity costs while setting rates for the utility's Carolina Power division.

Power Marketers Flex at FERC

W. Lynn Garner and Lori A. Burkhart

Electric utilities beware. Power marketers are not only here to stay, but their ranks are growing. The Federal Energy Regulatory Commission (FERC) logged approximately 100 applications in 1994, compared to nine in 1993. About half have been acted on already.

The fledgling industry is also staking out its regulatory territory. Notably, on December 14, the FERC ordered the Tennessee Valley Authority (TVA) to provide nonfirm transmission service to AES Power Inc.

Illinois Rejects Monetization of Externatilies

Phillip S. Cross

The Illinois Commerce Commission (ICC) has reaffirmed earlier rulings that the state's least-cost planning laws must require consideration of the adverse external environmental costs of providing utility service. However, it rejected proposed new rules that would require monetization of the externalities based on projected costs of complying with future environmental regulations.

FERC Sets Guides for SO2 Emission Allowance Cost Recovery

Lori A. Burkhart

The Federal Energy Regulatory Commission (FERC) has approved a policy statement and interim rule establishing guidelines for recovering the cost of sulphur dioxide (SO2) emission allowances in wholesale rates. The FERC also ruled that utilities do not need its approval to sell or transfer emission allowances, because allowances are related to electric generation, which lies beyond FERC jurisdiction (Docket No. PL95-1-000).

Ohio Pushes Local Service Competition

Phillip S. Cross

The Ohio Public Utilities Commission (PUC) has reaffirmed its desire to open local exchange telephone markets to competition, urging "all deliberate speed." The PUC voiced its telephone competition policy in approving a new, six-year, price-cap regulation plan for Ameritech Ohio, a local exchange carrier (LEC). The plan, which reduces the LEC's revenue by $92.3 million, cuts intrastate toll charges by $7.9 million, residential rates by $55 million, and access charges for long-distance carriers by $8 million.

Onsite Storage: The Impact of State Regulation on Nuclear Policy

Nicholas S. Reynolds and Robert L. Draper

(SIDE SUBHEAD)

Nuclear plant licensees could face an added level of state regulation just as they move to cut costs.Permanent disposal capacity for low-level radioactive waste (LLW) and spent nuclear fuel, long a top priority for the nuclear industry, has not yet become a reality. But the storage question draws more attention for its impact on nuclear power costs as electric generation grows more competitive.

FERC Claims Power to Order Dam

Lori A. Burkhart

The Federal Energy Regulatory Commission (FERC) has adopted a policy statement on hydroelectric plant decommissioning, claiming authority to deny new project licenses when existing licenses expire and to order owners to remove a dam during the relicensing process. These measures would only be applied if the FERC concludes that a project, no matter how many conditions were imposed, could no longer meet the comprehensive development standard of the Federal Power Act (FPA) (Docket No. RM93-23-000).

The statement was one of three hydroelectric orders considered as a group.

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