Sithe Alleges Niagara Mohawk Overcharged
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. According to Sithe, if average transmission losses equal 3 percent of the electricity NMP transmits for the IPP, it loses about $10,000 each day that NMP continues to calculate the transmission losses on an incremental basis. According to these calculations, Sithe was owed about $700,000 as of March 1, 1995.
The debate over the sale of the federal power administrations (PMAs) continued May 18 at a hearing before the House Subcommittee on Water and Power Resources. President Clinton had proposed selling the PMAs in February, and both the Senate and House Budget Committees have included privatization proposals in their 1996 budgets.
A letter to House Speaker Newt Gingrich (R-GA), signed by 52 members of Congress, asks him to kill the plan to sell the Alaska, Southeastern, Southwestern, and Western PMAs. The letter claims that privatizing the PMAs would result in electric rate increases and reduced competition. It also notes that PMAs are projected to return more than $1.323 billion in revenues to the U.S. Treasury over and above the appropriations request for fiscal year 1996.
"I support privatizing government entities when it makes sense," said Rep. Earl Pomeroy (D-ND). "However, privatizing the Bonneville Power Administration (em a very complex PMA (em would destabilize the Pacific Northwest. BPA's useful assets alone could be sold, but that just leaves the taxpayers with a lot of bad debt."
National Rural Electric Cooperative Association (NRECA) executive vice president Glenn English said his association would oppose any proposal to sell the PMAs that would result in increased electric rates. He noted a hike would adversely affect nearly 30 million consumers in 34 states. American Public Power Association (APPA) deputy executive director Alan Richardson said the APPA adamantly opposes the sale. Instead, he advocated turning the PMA's over to existing consumer-owned utilities and state power agencies that have federal power allocations.
Speaking on behalf of the Edison Electric Institute (EEI), Charles E. Bayless, chairman, president, and CEO of Tucson Electric Power Co., advocated an open sale of the PMAs. He cited benefits such as promoting competition in the wholesale market, cutting the federal deficit, and reducing the government's role in generating and transmitting electricity. Bayless said a study commissioned by EEI predicted rate increases of less than 5 percent for 85 percent of all current customers. t
Lori A. Burkhart is an associate legal editor of PUBLIC UTILITIES FORTNIGHTLY.
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