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Fortnightly Magazine - February 1 1996

Transmission or Distribution? Reengineering Cost-of-Service Studies for the Emerging Competitive Market

John S. Ferguson

Why will cost-of-service studies continue to prove useful in a competitive market?

Cost is one of more than a dozen factors to consider in setting prices, whether in a regulated environment or a competitive regime. However, the relative significance of these factors will change under competition, when understanding the true cost of an individual service will actually become more important than under regulation.

El Paso Neutralizes Threat from Defense Dept.

Phillip S. Cross

Faced with the possibility that existing contracts to provide electric service to Holloman Air Force Base and the White Sands Missile Range would lapse if the two facilities carry out plans to solicit competitive bids for their power-supply requirements, El Paso Electric Co. has convinced both the U.S. Army and U.S. Air Force to continue taking service in the traditional way for an extended period of time.

Frontlines

Bruce W. Radford

As I began to write this column, the California Public Utilities Commission (CPUC) was slated in less than 30 minutes (this time, for real) to unveil its final proposed plan to restructure the electric utility industry. After the deed was done, on Wednesday, December 20, I logged on to ftp.cpuc.ca.gov and downloaded the text of the two opinions, issued by California commissioners Daniel Fessler and Jessie Knight.

CPUC to Review SCE Plans to Divest DSM Assets

Phillip S. Cross

The California Public Utilities Commission (CPUC) has asserted jurisdiction over a controversial proposal by Southern California Edison Co. (SCE) to transfer personnel and assets from an existing ratepayer-funded energy-efficiency program to an unregulated affiliate.

People

Robert W. Foy replaced Charles H. "Bud" Stump as chairman of California Water Services Co. Stump, who has been with the company 45 years, will remain on the board. Foy, president and CEO of Pacific Storage Co., has been a CWS director since 1977.

The Gas Research Institute board of directors elected Christine A. Hansen and Stanley C. Horton as new members. Hansen, executive director of the Interstate Oil and Gas Compact Commission, joins GRI as an at-large director.

Court Faults Commission on Rate Restructuring

Phillip S. Cross

The Appellate Court of Illinois (First District) has ruled that the Illinois Commerce Commission (ICC) failed to properly consider the effect on consumers when it approved a rate restructuring plan for Central Telephone Co. of Illinois, a telecommunications local exchange carrier (LEC). An ICC order from a base-rate proceeding had permitted the LEC to eliminate most of its flat-rate calling plans and replace them with usage-sensitive service offerings. The order also permitted a general shift of costs away from business users and onto the residential customer class.

Joules

jü( )l, n: A unit of energy measurement equal to a watt-second.

Tenneco Energy and Chinese Petroleum Corp.'s new alliance plans to work on natural gas transmission facilities, power plants, and other energy ventures in Taiwan and North America. Their first project is a

600-Mw natural gas-fired power plant near Taipei, expected to go on line in June 1998. CPC is one of Asia's largest state-owned energy companies; Tenneco Energy, of Houston, transports or markets about 16 percent of the natural gas used in the United States.

W.Va. Approves LDC Price-cap Plan

Phillip S. Cross

The West Virginia Public Service Commission (PSC) has approved a new incentive regulation plan for Mountaineer Gas Co., a natural gas local distribution company (LDC). The plan creates price caps that are slightly below current rates and assigns the LDC the risks and benefits of any efficiency gains or losses during the three-year plan period. The settlement also calls for a $3-million rate reduction, and forbids the utility to file for a rate increase during the three-year period. Mountaineer fully assumes the risks and benefits of the fluctuating gas market.

Virginia Sends Message to City

Lori A. Burkhart

The Virginia State Corporation Commission (SCC) has exercised jurisdiction and declared that the City of Falls Church must obtain its approval before attempting to condemn electric facilities owned by Virginia Power Co. (Vepco). Vepco had filed a petition with the SCC, claiming that Falls Church intended to oust the utility from serving the area. Falls Church failed to contest the petition or respond to allegations that the SCC did not have jurisdiction. The utility's petition alleged that the city plans to condemn Vepco meters and other facilities.

MCI to Provide Local Telephone Service

Phillip S. Cross

The Indiana Utility Regulatory Commission (URC) has authorized MCI Telecommunications Corp., an interexchange carrier, to provide certain local business telephone services in the Indianapolis area on a two-year trial basis. These services (em which MCI will resell under an agreement with Hancock Rural Telephone Corp., a local exchange carrier (LEC) (em were previously offered exclusively by either Hancock or Ameritech Indiana, another LEC serving the Indianapolis area. The trial program is the result of a settlement agreement between MCI and Hancock.

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