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Fortnightly Magazine - January 1 1996

Electric Transmission: An Overview

Bruce W. Radford

By its Notice of Proposed Rulemaking on wholesale electric competition, commonly called the "Mega-NOPR" (or "Giga-NOPR"), the Federal Energy Regulatory Commission (FERC) has announced big plans for electric transmission.

The FERC would require "functional" unbundling of transmission from generation. The Mega-NOPR requires utilities that own transmission to file tariffs for point-to-point and network transmission services, based on guidelines in pro forma tariffs published by the FERC.

FERC Claims Jurisdiction Over Tiered Pipelines

Lori A. Burkhart

In three similar orders, the Federal Energy Regulatory Commission (FERC) has given itself regulatory authority over linked and integrated intrastate pipelines in certain situations.

The first order finds the Kansas Pipeline (KP) system a single interstate pipeline system subject to the FERC's Natural Gas Act (NGA) jurisdiction, requiring KP to file an application for certificate authorization (Docket No. RP95-212-000).

Embedded Cost Pricing: What Fairness Demands

Gerald B. Ostroski

As the generation side of the electric industry becomes increasingly deregulated and transmission migrates toward common carrier status, an easily administered and fairly applied pricing system must be developed. The concepts of "postage stamp" tariffs and "contract paths" lose all logical viability. They possess no totally encompassing tie between the provider of the service and the revenues for that service.

FERC Puts EBB Onus on Gas Industry

Lori A. Burkhart

The Federal Energy Regulatory Commission has issued an advance notice of proposed rulemaking on "Standards of Communication Among Natural Gas Pipeline Companies and their Customers" (Docket No. RM96-1-000). At the same time, Commissioner James J. Hoecker urged the natural gas industry to continue its voluntary efforts to develop standards for electronic bulletin boards (EBBs). Commissioner Vicky A. Bailey agreed that the gas industry should take the lead, but warned that it has only a limited window of opportunity before the FERC takes over. Commissioner Donald F. Santa, Jr.

Incremental-Cost Pricing: What Efficiency Requires

Alfred F. Mistr, Jr.

In thinking about transmission pricing for a competitive electric industry, we should remember that the fundamental objective of competition is to increase economic efficiency. Improved economic efficiency, after all, leads to better use of resources, lower costs, and long-term benefits for consumers.

Coalition Seeks DOE Action on Nuclear Waste

Lori A. Burkhart

The U.S. Department of Energy (DOE) has settled its lawsuit with the State of Idaho, clearing the way to resume shipments of radioactive waste from Navy ships to a DOE storage site in Idaho. DOE will pay Idaho $350 million and has promised to remove the Navy's spent fuel from the Idaho storage site by 2035 or face a $60,000-a-day penalty.

Frontlines

Bruce W. Radford

On Saturday, November 11, WPL Holdings, Inc. announced its three-way merger with IES Industries Inc. and Interstate Power Co. to form Interstate Energy. The very next day, in a full-page ad that ran in Milwaukee Journal-Sentinel, Madison Gas & Electric Co. launched its counteroffensive, featuring Boris the Pig.

"Hi (em I'm Big Boris," the ad begins. (The face of a handsome pig with a large snout stares back at the reader.) "My friends and I crave Radical Electric Deregulation.

Capitol Hill: The Bells Toll for PURPA

Lori A. Burkhart

The beleaguered Public Utilities Regulatory Policies Act of 1978 (PURPA) has a new assailant (em U.S. Rep. Cliff Stearns (R-FL). Stearns's bipartisan legislation, H.R. 2562, the "Ratepayer Protection Act," proposes repeal of section 210 of PURPA, which requires electric utilities to purchase power at avoided costs.

People

Thomas L. Yohe of Philadelphia Suburban Water Co. was appointed to the Cleanup Standards Scientific Advisory Board. The 13-member board is a new division of Pennsylvania's Department of Environmental Protection.

NorAm Energy Corp. has formed a new unregulated retail subsidiary, NorAm Energy Management (NEM), and appointed Rollie Bohall senior v.p. and COO. David Houghtby, formerly of Minnegasco, will be NEM v.p.

Financial News

Charles M. Studness

When Niagara Mohawk Power Corp. announced its competitive restructuring plan on October 6, 1995, it broke ranks with what had been a curiously united front against competition. The opposition had learned to genuflect before the altar of competition, but then fight doggedly to keep markets closed. This united front had implied that competition would produce largely the same impact on all utilities, but that is not true. Competition offers lucrative long-term opportunities for some utilities and potential disaster for others.

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