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Fortnightly Magazine - December 1995

Frontlines

Bruce W. Radford

John Anderson is jumping out of his shoes. And his socks, too. His group, the Electricity Consumers Resource Council (ELCON, where Anderson serves as executive director) may at last get its way.During a few weeks in October, a good half-dozen energy industry players (em including utilities and regulators (em came out in favor of customer choice for electric and gas service.

FERC Upholds N.J. QF Procedures

Lori A. Burkhart

The Federal Energy Regulatory Commission (FERC) has denied a Jersey Central Power & Light Co. (JCPL) request that it invalidate the procedures used by the New Jersey Board of Public Utilities (BPU) to implement the Public Utility Regulatory Policies Act of 1978 (PURPA) (Docket No. EL95-36-000).

JCPL claimed that state procedures required it to enter into a purchase agreement with a qualifying facility, Freehold Cogeneration Associates, L.P., for 100 megawatts of power at rates that exceeded JCPL's avoided cost at the time of contract execution and approval.

People

Entergy Corp. has hired John A. Brayman, former president of Ameritech Corp.'s telephone industry services subsidiary in Chicago. Brayman will continue company expansion into nonregulated, domestic energy, and utility-related business as executive v.p. of Entergy Enterprises, Inc. and president of an as-yet unnamed group.J. William Holden was named Southern Electric International's v.p. for operations and development in Latin America and the Caribbean.

GE Supply, a General Electric division, promoted William C. Betke to g.m.

Financial News

Leonard S. Hyman

At Addison Mizner's pink fantasy on a Spanish theme, the Boca Raton Resort, the Edison Electric Institute (EEI) waited for Godot. Yes, that was the theme of EEI's 30th financial conference, and its first plunge into literature. You may remember the play, in which two hobos talk endlessly while waiting for the mysterious Godot, who has not yet arrived by the final curtain. In the same way, electric utilities and those who invest in them have been awaiting the advent of restructuring, the California remake of the industry, retail wheeling somewhere, and the wipeout of stranded assets.

Mailbag

Low Loads, Short Ride

Kevin O'Donnell's article "Aggregating Municipal Loads: The Future is Today" (Oct. 1, 1995) argues that residential and small commercial low-load-factor customers will do well in a competitive environment. Yes, I agree that the future for these customers is definitely today. Low-load customers will do much better in the short run. As long as excess capacity exists, sellers will price at little more than short-run marginal cost. Once excess capacity dries up, however, fixed costs will have to be paid.

Mass. OK's Stranded-cost Charge for Self-generators

Phillip S. Cross

The Massachusetts Department of Public Utilities (DPU) has ruled that Cambridge Electric Co. may recover stranded costs from customers that switch to self-generation. The DPU made the ruling while reviewing a "Customer Transition Charge" (CTC) filed as part of the utility's tariff for services in connection with the operation of a cogeneration qualifying facility (QF) by one of its large customers, the Massachusetts Institute of Technology (MIT).

TMI Plaintiffs Can Seek Damages

Lori A. Burkhart

The U.S. Court of Appeals for the Third Circuit on October 17 ruled that plaintiffs claiming injuries related to the 1979 accident at Unit 2 of the Three Mile Island nuclear plant (TMI-2) may seek punitive damages. Plaintiffs may receive compensatory and punitive damages under the Price-Anderson Act from: 1) primary financial protection provided through commercial insurance policies, which is required of all nuclear utilities; and 2) secondary financial protection in the form of private liability insurance under an industry retrospective rating plan.

Retail Wheeling Looms in New Hampshire

Phillip S. Cross

The New Hampshire Public Utilities Commission (PUC) has issued preliminary guidelines for a pilot program to examine the implications of retail competition in the electric industry. The guidelines, which respond to a state law mandating creation of a retail competition pilot, propose opening 3 percent of each electric utility's peak load to competitive suppliers of electric power.

SBT Settlement Gives Large Refunds

Lori A. Burkhart

Oklahoma appears finally to have settled a 1992 Southwestern Bell Telephone (SBT) rate case, refunding customers about $438 million and cutting rates by $84.4 million annually. The settlement follows an FBI investigation and allegations of commission bias. The Oklahoma Supreme Court will formally approve the settlement once the many related, pending lawsuits are dismissed.

Virginia Tentative about Electric Restructuring

Phillip S. Cross

The Virginia State Corporation Commission (SCC) has initiated an investigation of electric industry restructuring and emerging competition. The SCC stressed that Virginia is not saddled with high-cost power, and that larger electric utilities in the state currently provide service at rates "significantly below" the national average. Nevertheless, the SCC concluded that a formal investigation was necessary to determine whether regulatory improvements might result in reliable service at lower costs for state consumers.

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