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Fortnightly Magazine - July 1 1995

People

Philip R. Sharp, former 10-term congressman from Indiana, has been named director of the Institute of Politics at Harvard University's John F. Kennedy School of Government. Sharp assumes the position on July 1, succeeding Charles Royer, former mayor of Seattle, WA.

NICOR Inc. has elected Thomas L. Fisher, currently president and COO, to the additional position of CEO. Fisher will continue as president and CEO of Northern Illinois Gas Co., the company's largest subsidiary.

Charles W.

Executive Compensation Alerts Regulators

Phillip S. Cross

Does competition justify higher salaries for utility executives? Some regulators have suggested the opposite. Others argue that ratepayers must benefit directly from any incentives offered to utility managers.

The Vermont Public Service Board (PSB) recently forced stockholders to pay a share of executive compensation costs for two utilities (em Green Mountain Power Co. and Central Vermont Public Service Corp. (em that exhibited higher-than-average executive compensation, and capped compensation for rate cases.

Mailbag

Kenneth W. Costello and Robert E. Burns

T.R. Standish's letter ("NUGs Take the Cake," May 1, 1995) in response to our article ("How State Regulators Should Handle Retail Wheeling," Feb. 15, 1995) reflects the views of those who believe that the full benefits of competition in the electric power industry do not require retail competition. Mr. Standish, in fact, believes that retail competition is bad and not inevitable. We would like to address several of his points:

Reasonable people can certainly debate the inevitability of retail competition. But unlike Mr.

Palo Verde Disallowance Upheld

Phillip S. Cross

A Texas Court of Appeals in Austin has turned back an appeal by El Paso Electric Co. (EPE) challenging a state commission ruling that disallowed rate recovery of the utility's investment in the Palo Verde Unit 3 nuclear generating plant as excess capacity. It rejected the utility's claim that use of the plant for base-load and offsystem wholesales warranted cost recovery.

The Palo Verde disallowance had come in a 1992 commission rate order.

NERC Moves Forward with EINs

Lori A. Burkhart

The North American Electric Reliability Council (NERC) has completed a series of workshops on what it calls "electronic information systems" (EINs). The NERC workshops were held in response to the Federal Energy Regulatory Commission (FERC) "Mega-NOPR" of March 29, which contemplates opening the wholesale electric industry to competition.

NGV Program Gets Rate Support in WVA

Phillip S. Cross

The West Virginia Public Service Commission (PSC) has approved a request by the state's natural gas local distribution companies (LDCs) to extend a statewide natural gas vehicle (NGV) program first approved in 1992.

IPPs Bond Within ERCOT

Lori A. Burkhart

A new group, the Independent Power Suppliers of ERCOT (IPSE), has formed to speak for nonutility power suppliers that operate within the Electric Reliability Council of Texas (ERCOT). The stated mission of IPSE is "to promote the reliable operation of power systems within ERCOT, in which a competitive, environmentally responsible and profitable independent electric power industry can flourish." Membership is open to all nonutility generators (NUGs), cogenerators, and power marketers.

Consumers Power Must Bid for More Midland Power

Phillip S. Cross

The Michigan Public Service Commission (PSC) has warned Consumers Power Co., an electric utility, that the utility may only take more power from its affiliated Midland Cogeneration Venture (a qualifying cogeneration facility) through a competitively bid capacity solicitation.

Moody's: Co-op Credit Strength Will Decline

Lori A. Burkhart

Moody's Investors Service has released a report, Moody's Outlines Risk Profile for Electric Cooperatives, which finds that the era of deregulation will lead to an average credit quality decline for generation and transmission cooperatives (G&Ts), just as it will for investor-owned utilities (IOUs) over the next five to 10 years. The report stresses that both G&Ts and distribution cooperatives face increased business and financial risks.

Michigan PSC Oks Flexible Tariffs

Phillip S. Cross

The Michigan Public Service Commission (PSC) has rejected allegations that flexibly priced tariffs for electric service are unlawfully discriminatory under state law. The ruling opens the way for Consumers Power Co. to impose a new Special Competitive Services (SACS) tariff. The new SACS rate would allow Consumers to negotiate onpeak billing demand and energy charges within a range of rates for customers with a less expensive alternative energy source.

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