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Fortnightly Magazine - June 15 1995

Perspective

Thomas J. Sloan

John Huey (Fortune, Feb. 21, 1994) suggests that some corporate leaders resemble candidates running for office. Cynically, this conjures an image of the slick campaigner (em a blue suit, a thick head of hair, makeup artists, acting class, and speech coaches. Yet, Mr. Huey raises an issue that cannot be ignored. How can public utilities learn to communicate better?

I've worked as a communications director at a major investor-owned electric company.

Mass. Joins Electric Restructuring Craze

Phillip S. Cross

According to the Massachusetts Department of Public Utilities (DPU), electric generation is no longer best organized as a monopoly. This conclusion has led the DPU to open an inquiry to investigate: 1) how restructuring the electric industry in the state would promote competition and benefit customers, and 2) whether to extend to some or all customers the option of choosing their own supplier of electricity. Re Electric Industry Restructuring, D.P.U. 95-30, Feb. 10, 1995 (Mass.D.P.U.).

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PURPA: At Odds With the New Industry?

Lori A. Burkhart

The issue of the day is what to do with the Public Utility Regulatory Policies Act of 1978 (PURPA). Whether the act will be repealed or merely revised is open to debate, but the consensus is that changes are forthcoming.

Ever since the Federal Energy Regulatory Commission (FERC) issued its February order finding that the California commission had violated PURPA by requiring Southern California Edison Co. and San Diego Gas and Electric Co.

NY Approves Self-generation Deferral Incentives

Phillip S. Cross

The New York Public Service Commission (PSC) has approved a proposal by New York State Electric & Gas Corp., an electric utility, to offer a new rate mechanism to retain and regain low-load-factor (5 to 35 percent) customers with viable self-generation options.

EPE/CSW Merger Finds Favor at FERC

Lori A. Burkhart

Federal Energy Regulatory Commission (FERC) administrative law judge Jerome Nelson has found the proposed merger between Central and South West Corp. (CSW) and the bankrupt El Paso Electric Co. (EPE) consistent with the public interest (Docket Nos. EC94-7-000 and ER94-898-000). However, Judge Nelson recommended that approval be subject to a FERC decision on a number of comparability issues. (The FERC had issued an earlier opinion imposing comparability as part of the merger deal, but excepting ERCOT members.

N.C. Sets Rates for Information Superhighway

Phillip S. Cross

The North Carolina Utilities Commission (NCUC) has approved a series of charges levied by local exchange carriers (LECs) under their agreement with the state government to operate the North Carolina Information Highway (NCIH). The NCIH is a broadband network that

uses fiber-optic cable and advanced switching and transmission equipment to provide data, video, and imaging communications to sites throughout the state. The technology is not yet generally deployed in the public telephone network.

Sithe Alleges Niagara Mohawk Overcharged

Lori A. Burkhart

Sithe/Independence Power Partners, L.P., an independent power producer (IPP), has filed a petition at the Federal Energy Regulatory Commission (FERC) alleging that Niagara Mohawk Power Corp. (NMP) has been overcharging for electric transmission. Sithe believes NMP has been calculating transmission losses on an incremental basis; FERC policy requires that transmission losses be calculated on an average basis.

Alternative Regulation for Mass. Telecom Moves Forward

Phillip S. Cross

The Massachusetts Department of Public Utilities (DPU) has rejected challenges to an alternative price regulation plan proposed by NYNEX, a local exchange carrier (LEC). The New England Cable Television Association, Inc. had claimed that the DPU lacked authority to adopt a rate plan not tied directly to cost of service.

Distributed Generation: Implications for Restructuring the Electric Power Industry

Mohamed M. El-Gasseir

Until a few years ago, the concept of distributed or modular generation was largely academic. Recent developments in the electric power industry, however, have brought this once esoteric subject to the attention of utility executives as well as state and federal policymakers. Centralized, large-scale plans to use modular generators and demand-side management (DSM) to displace utility investments in bulk-power resources and high-voltage transmission projects is unrealistic.

Financial News

Charles M. Studness

Regulation of the United Kingdom's 12 regional electricity distribution companies (RECs) has sought to promote efficiency through the use of price caps that are supposed to remain in place for five years without regulatory intervention. The benefits of cost reductions between reviews accrue to shareholders no matter how much earnings might rise. The idea was to provide more incentive than if earnings were subject to review whenever they exceed some specified level.

Productivity has increased enormously under this system.

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