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Fortnightly Magazine - February 15 1995

The Market Transition: Is FERC Pricing Policy on the Wrong Side of the Road?

Charles E. Bayless

In the United States, the Federal Energy Regulatory Commission (FERC) has undertaken the task of guiding the electric power industry from regulation to competition. But unless the FERC develops a plan to consider all facets of electric deregulation at the same time, we may end up driving on the wrong side of the road.

Last October the FERC issued its policy statement on electric transmission pricing. See, Inquiry Concern. Pricing Policy for Trans. Servs.

Nuclear Waste Reform Among First Energy Bills

W. Lynn Garner and Lori A. Burkhart

Over 300 bills were introduced in the first week of the new Congress that convened in January, among them a bill by Sen. J. Bennett Johnston (D-LA) aimed at correcting the government's seriously flawed nuclear waste storage program. Johnston heralded S.

How State Regulators Should Handle Retail Wheeling

Kenneth W. Costello, Robert E. Burns, and Youssef Hegazy

By Kenneth W. Costello, Robert E. Burns, and Youssef HegazyThe electric power industry is next in line for dramatic change. Competition has edged into individual markets, particularly the bulk-power market. This move toward competition has provoked debate in several states over the merits of retail wheeling. Specifically, should retail customers have the right to purchase their power requirements from sources other than the local utility? Many states have addressed the issue in different forums, at different levels of intensity.

FERC to States: No QF Rates Higher than Avoided Cost

Lori A. Burkhart

The Federal Energy Regulatory Commission (FERC) has ruled that states may not set rates higher than a utility's avoided cost for power purchases from qualifying facilities (QFs) (Docket Nos. EL93-55-000 and

EL87-53-003). The new rule comes as part of a case in which Connecticut Light and Power Co.

How Stranded Will Electric Utiliites Be?

Eric Hirst and Lester Baxter

Stranded commitments (SC), because they are potentially huge, may be a show stopper for increased competition in the U.S. electricity industry. Utility shareholders, industrial customers, and small commercial and residential customers are likely to wage tough battles before state and federal regulatory commissions as they seek to reduce their exposure to these costs.

Telecommunications Reform Effort Renewed

Lori A. Burkhart

The seven regional Bell operating companies have formed a coalition (em the Alliance for Competitive Communications (em to spearhead their efforts to reform the nation's telecommunications laws. The group's central goal is to eliminate barriers to competition among local telephone, long-distance, and cable television companies by:

s Encouraging competition in all markets

s Protecting universal service

s Opening markets to all competitors at once

s Ensuring that all competitors in each market are regulated similarly.

Letting Go of Electric Generation

David P. Wagener

The year-long decline in the electric utility stock market has caught most market observers off guard. Picking the winners among electrics has become more difficult. Says Ed Tirello, long-time market savant and utility equity analyst at NatWest Securities, "Competition and retail wheeling have made the selection process nearly impossible short term."

To identify tomorrow's best industry performers, electric utility analysts have focused on generation.

FERC Asked to Suspend CPUC Auctions

Lori A. Burkhart

Southern California Edison (SCE) has asked the Federal Energy Regulatory Commission (FERC) to halt the state's Biennial Resource Plan Update energy auction (BRPU). SCE charges that the California Public Utilities Commission (CPUC) violated the Public Utility Regulatory Policies Act (PURPA) and FERC regulations by reinstating the auction late last year.

SCE believes that the auction, which requires California utilities to enter purchased-power contracts, could increase its potential stranded costs by up to $4 billion (in nominal dollars).

Old Age Warrants Facelift for Stranded Costs

David P. Wagener

The year-long decline in the electric utility stock market has caught most market observers off guard. Picking the winners among electrics has become more difficult. Says Ed Tirello, long-time market savant and utility equity analyst at NatWest Securities, "Competition and retail wheeling have made the selection process nearly impossible short term."

To identify tomorrow's best industry performers, electric utility analysts have focused on generation.

FEC Questions Derivative Use

Lori A. Burkhart

The Federal Energy Regulatory Commission (FERC) will allow Aquila Power Corp., a power marketing subsidiary of UtiliCorp United Inc., to sell electricity at market-based rates, and has approved open-access transmission tariffs for UtiliCorp (Docket Nos. ER95-203-000 and ER95-216-000). Commissioner William L.

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