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Fortnightly Magazine - January 15 1996

Give No Credence to Lemons! Some Lessons in Market Research

James A. Montanye

Theory and experience teach that commercial market research

can be of very poor quality. What does that mean

for regulators and utility managers?

How can regulators and utility managers know whether and to what extent to trust commercially prepared market research?

FERC Approves Market-Based Gas Storage Rates

Lori A. Burkhart

Finding that Enron Storage Co. lacks market power, the Federal Energy Regulatory Commission (FERC) has approved its request for market-based storage rates for firm and interruptible natural gas service under section 311 of the Natural Gas Policy Act of 1978, subject to conditions (Docket No. PR94-2-000). Enron proposed that rates for individual storage services be determined by the marketplace and agreed to by itself and the customer through arm's-length negotiations.

Customer Forum

Every year, Public Utilities Fortnightly holds a forum electric utility executives. And another for gas utility executives. And another for state regulators.

This year we decided to ask utility customers what they think.DuPont, the country's number one chemical company, operates in 70 countries. It is, perhaps, best known for its Teflon products, but it also makes refrigerants, pigments, fibers (Lycra), nylon resins, electronics, medical products, and many other products.

FERC Approves Open-access Tariffs

Lori A. Burkhart

The Federal Energy Regulatory Commission (FERC) has accepted proposed open-access, point-to-point, and network transmission service tariffs filed by Tampa Electric Co. (TE), effective November 14 (Docket No. ER95-1775-000) and subject to the outcome of its open-access Notice of Proposed Rulemaking (mega-NOPR) proceeding. TE says the tariffs substantially conform to the pro forma tariffs proposed under the mega-NOPR, and were calculated using the methods outlined there.

Innovative Rates: Four Customers, Four Solutions

C. Douglas Bowman

Flexible rate options can remain cost-based, even in a buyer's market, and yet

allow choice between price, reliability, and scheduling.

Customers with a choice are demanding, and getting, lower electric bills. These customers generally include municipals and large industrials. Municipals, as wholesalers, gained access to alternative suppliers via the Energy Policy Act of 1992.

Trans Alaska Rate Settlement Resolved

Lori A. Burkhart

On November 8, the Federal Energy Regulatory Commission (FERC) approved a major rate settlement on pipeline corrosion issues for the owners of the Trans Alaska Pipeline Systems (TAPS), based on a November 1994 agreement in principle among the parties. The settlement results from an alternate dispute resolution (ADR) technique that employed a mini-trial and involved high-level representatives for all parties.

Price-Based Regulation: The Elegance of Simplicity

William D. Steinmeier

When economic reformers in the old Soviet Union searched for a metaphor to describe their move to a market economy, they a spoke of a horseman jumping a ditch. The true test of a strategy was that it carried you to the other side. It was no time for half-measures.

Electric utility regulators face a similar challenge.

Watts Bar Goes on Line

Lori A. Burkhart

The Nuclear Regulatory Commission (NRC) has authorized the Tennessee Valley Authority (TVA) to load fuel and perform low-power testing of the Watts Bar nuclear plant. The low-power license will allow the 1,160-megawatt Unit 1 to operate at 5 percent of capacity. The license verifies that Watts Bar construction is complete, and that all safety and environmental requirements have been met. A license to operate at full power may be granted once the fuel loading and low-power testing is complete. Commercial operation is anticipated for spring 1996.

Frontlines

Bruce W. Radford

Deregulate in haste; repent at leisure. That's what they say about love, marriage, and ratemaking. Yet, in the utility business the regrets are pouring in (em sometimes from the same people who sent out the invitations.

For example, at the end of November, a week before I put fingers to keyboard, the FERC was shocked to discover that the proposed Altus merger between The Washington Water Power Co. and Sierra Pacific Power Co.

USEC Privatization Moves Forward

Lori A. Burkhart

The United States Enrichment Corp. (USEC), after consulting with the U.S. Treasury Department, has selected investment bankers for its proposed privatization. The Energy Policy Act of 1992 called for USEC to prepare two paths to privatization: an IPO and a negotiated mergers and acquisition transaction with a third party. USEC supplies 86 percent of the domestic uranium enrichment market, and 37 percent of the world market.

Based on competitive bidding, Morgan Stanley & Co., Inc. has been chosen as transaction manager.

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