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Will IOUs Unbundle by 2000

Fortnightly Magazine - June 1 1995

plan proposes total distributions of about $3.6 billion to creditors, including $2.3 billion to pay pre-petition debt, with $1.1 billion in interest on that debt.

CGT's plan proposes a total distribution of about $3.9 billion to creditors, including about $2.2 billion to the parent company to resolve secured and unsecured claims, about $1.2 billion for producer claims, and about $300 million toward third-party claims.

John H. Croom, Columbia Gas System Chairman and CEO, predicts distributions under the two plans before the end of the year. Croom also believes the companies will emerge from bankruptcy with investment grade debt ratings. CGT claims the settlement has wide support from state regulatory commissions. (em L.B.

In two recent decisions the Dane County (Wisconsin) circuit court has affirmed state commission (PSC) jurisdiction to enforce a competitive bidding process for building new power plants.

The two cases upheld the use of system modelling and intangibles, plus an environmental impact statement (EIS). They also upheld the PSC's move to adopt a generic bidding process on a three-year experimental basis, which delays a contested case hearing until a winning bid is chosen, and delays an EIS until a specific construction proposal is selected.

According to Steve Schur, a PSC attorney, the most interesting part of the bidding process is that it is not plant- or site-specific. Schur said it allows a "robust bunch of proposals to come in," achieving the lowest cost. (em L.B.

The Virginia commission on April 20 authorized Virginia Electric and Power Co. (VP) to implement a five-year, experimental real-time pricing rate (RTP), but denied a proposal to custom-build dispersed generating facilities at customer sites.

The RTP will allow VP to set rates for large industrial customers (over 10,000 Kw) based in part on the actual hourly cost of generating electricity (Case No. PUE940080). The pilot program allows VP to experiment with market-based pricing by offering industrial users the opportunity to directly control their energy costs.

But the commission rejected VP's proposed dispersed energy facility rate (schedule DEF), finding it not specific enough to be carried out on an "experimental" basis. Moreover, the commission said that dispersed generation might actually increase costs incurred due to customer self-generation. (em L.B.

Citicorp Securities Inc. is questioning whether the New York Public Service Commission is giving fair treatment to Niagara Mohawk Inc. (Ni-MoM), compared with rate increases the PSC allowed recently for New York State Electric & Gas (NYSEG).

According to Citicorp, the PSC on April 20 blessed NYSEG with average electric rate hikes 2.9 percent in 1995, 2.8 percent in 1996, and 2.7 percent in 1997, while freezing industrial rates. In contrast, Citicorp points to what it calls a "very moderate" $36 million (1.1 percent) rate increase awarded to Ni-Mo on April 19, in which the PSC allegedly encouraged Ni-Mo to address issues such as competitive position and high-priced purchased-power contracts.

With about $50 to $60 million in annual increases for nondiscretionary purchased power costs expected for Ni-Mo through the remainder of the decade, Citicorp observed that supportive rate treatment similar to that accorded NYSEG is critical to