Fortnightly Magazine - September 1 1995

NHA Asks for Relicensing Reform

The National Hydropower Association (NHA) has asked the Federal Energy Regulatory Commission (FERC) to reform its regulations governing the relicensing of hydroelectric projects. No legislation would be involved.

N.C. Defers Retail Wheeling

Finding the state's electric regulation in excellent condition, and noting a slowdown in the movement toward retail wheeling in other states, the North Carolina Utilities Commission (UC) has decided against ruling on the issue at this time. It rejected calls to open a formal "adversarial" proceeding to investigate issues associated with retail wheeling or retail generation competition.

FERC Asks AEP to Justify Rate Differential

The Federal Energy Regulatory Commission (FERC) has agreed to set a hearing on the reasonableness of American Electric Power Co.'s (AEP) nonfirm, offpeak hourly rate for electric transmission service (Docket No. EL95-4-000).Commonwealth Edison Co. (CE) has alleged that Indiana Michigan Power Co., an AEP operating company, overcharges for hourly, nonfirm transmission services provided during offpeak hours.

FERC Passes on Trojan Contract Dispute

The Federal Energy Regulatory Commission (FERC) has allowed an Oregon state court jurisdiction over a contract dispute between Portland General Electric Co. (PGE) and Southern California Edison Co. (SCE) (Docket No. EL94-92-000).In 1987, the FERC accepted a contract for PGE to sell SCE long-term system power and for a mutual exchange of capacity and energy. In 1994, SCE filed a complaint in Oregon state court, alleging that PGE had defaulted on the contract by closing the Trojan nuclear plant. SCE argued that its continued performance under the contract was excused.

FERC Creates Companion to NOPR

The Federal Energy Regulatory Commission (FERC) has issued a companion order to its open-access Notice of Proposed Rulemaking (Docket No. ER93-540-003). The new order offers guidelines for presiding judges and participants in pending open-access cases that concern public utilities' offers of nondiscriminatory services.

RTGs Make Progress

The Southwest Regional Transmission Association (SWRTA) has filed amended bylaws with the Federal Energy Regulatory Commission (FERC), incorporating two FERC conditions: 1) comparable transmission service, and 2) a single regional transmission plan. To achieve comparability, each transmitting member subject to FERC jurisdiction under sections 205 and 206 of the Federal Power Act will file comparable transmission service tariffs with the FERC.

Global Power Projects: Evaluating Market Potential

The Geneva summit between Ronald Reagan and Mikhail Gorbachev signaled the beginning of the end of the Cold War. With a diminished threat of East-West confrontation, countries throughout the world gradually reoriented their priorities (em away from politico-military security and toward economic development. To paraphrase Woodrow Wilson, the end of the Cold War had made the world "safe for capitalism."Now, 10 years later, with a few notable exceptions in the Balkans and elsewhere, evidence abounds to support that appraisal, from Argentina to Prague to Manila.

Financial News

Traditional utility regulation has been unable to prevent the electric rates of some utilities from rising far above those of neighboring companies. Two factors are responsible for this failure. First, regulators lack the means to keep seemingly reasonable but unnecessary costs from creeping into rates. Second, ratemaking considers a utility's costs in isolation and does not use peer benchmarks to true up rates.

Political pressure helped limit rate increases for nuclear plants during the 1980s.

The Efficient Utility: Labor, Capital, and Profit

Are utilities working at top productive capacity? A novel look at 19 investor-owned electrics in the Sun Belt.

Major restructuring is expected to hit investor-owned utilities (IOUs) over the next decade. Competitive market forces, in place of rate-of-return regulation, will require many companies to evaluate their resource allocations. No longer will singular adjustments in resource use suffice when both capital and labor resources must be realigned.

Gas Roundup

While setting a new gas cost adjustment rate for Delmarva Power & Light Co., a combined electric and gas utility, the Delaware Public Service Commission (PSC) found the utility's unaccounted-for-gas incentive program unnecessary because it had accomplished its objective, as evidenced by a steady decline in the rate of unaccounted-for gas. The PSC approved a $300,000 incentive award for the current adjustment. Re Delmarva Power & Light Co., PSC Dkt. No. 94-123F, March 21, 1995 (Del.P.S.C.).In another case, the PSC allowed Chesapeake Utilities Corp.

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