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Fortnightly Magazine - January 1 1996

Merger in the Midwest

Lori A. Burkhart

Puget Sound Power & Light Co. (PSPL) and Washington Energy Co. (WE) have agreed to merge, projecting $370 million in savings over the next 10 years from elimination of duplicate corporate and administrative programs, and integration of field operations and facilities. About 45 percent of the savings would come from an 8-percent reduction in combined workforces.

Illinois Court Rejects Electric Anti-bypass Rates

Phillip S. Cross

An Illinois Appellate Court has reversed a ruling by the Illinois Commerce Commission (ICC) that had allowed Commonwealth Edison Co. to enter negotiated rate contracts with up to 25 large general-service customers to retain existing load. The ICC had ruled that the antibypass tariff would not conflict with state laws requiring filing and publication of utility rates, because it must contain a description of the pricing and service parameters used in negotiating the individual contracts.

Gulf States Beats Cajun in First Round

Lori A. Burkhart

U.S. District Judge Frank Polozola issued a memorandum opinion on October 24, supporting Gulf States Utilities (GSU) against fraud claims made by Cajun Electric Power Co-op. (CEPP), involving its decision to invest in the River Bend nuclear plant. Judge Polozola will issue detailed reasons for the decision at a later date. (GSU owns 70 percent of River Bend; CEPP owns 30 percent.)

A second phase of the lawsuit involves breach-of-contract claims, but GSU and its parent company, Entergy, say they will attempt to settle all remaining issues.

Ohio Proposes Rules for LEC Competition

Phillip S. Cross

The Ohio Public Utilities Commission (PUC) has issued a proposed framework for competition in the local exchange telephone market. In a separate opinion, PUC chairman Craig A. Glazer noted that new market entrants in the state appear to be dominated by Time Warner.

Electricity Utility Mergers: The Answer or the Question?

Robert J. Michaels

Differences of opinion make for good horse races and bad jokes about economists, and those who are studying the recent wave of electric utility merger announcements have not let us down. Some of these economists optimistically believe that the mergers act as forces for competition, since they will combine corporate assets and staffs to bolster operating efficiency and market acumen at the merged companies. Other economists, who see transmission as the root of monopoly power, are more pessimistic.

Perspective

Leonard S. Greenberger

One of my first assignments when I was a reporter for this magazine was a story on the flap over the Environmental Protection Agency's 1990 draft report on electromagnetic fields (EMF).

N.C. Tightens Rules on Utility Promotional Programs

Phillip S. Cross

The North Carolina Utilities Commission (NCUC) has adopted a new set of guidelines to help settle disputes between electric and gas utilities over utility-sponsored promotional programs. It also established a rule for evaluating proposed incentive programs, approving a new food-service rate program designed by Duke Power Co. to encourage the installation of electric food preparation equipment in commercial kitchens.

Hurdling Ever Higher: A New Obstacle Course for Mergers at the FERC?

John F. Mandt and Karl R. Moor

For the partners in a utility merger, the celebration must wait. After opening the most delicate of dialogues, and then negotiating the price and closing the deal, the merger partners must yet gain the approval of regulators. The application may lie sealed in its FedEx pouch, safely on its way to Washington.

Marketing & Competing

Richard M. Morrow

As we move toward open energy markets, new players will be competing to offer consumers many of the services utilities offer today. It will no longer be enough to just meet our obligation to serve. We will also need to provide the products and services that customers value, at a level superior to that of the competition, while enhancing value to shareholders.

To retain customers, utilities need to understand the nature of the market. What customer values shape it?

Off Peak

David A. Foli and A. Clay Denton

At the November 1, 1995, meeting of the Natural Gas Roundtable in Washington, DC, a representative of the American Gas Association (A.G.A.) launched a blistering attack against the Energy Information Agency (EIA) for its forecasts of natural gas prices. In essence, A.G.A. complains that EIA's long-term forecasts have proven unreasonably high, softening enthusiam for gas-burning equipment (from turbines to gas water heaters).

As quoted by Gas Daily, A.G.A.'s representative said: "The bottom line is whose numbers are right.

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