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Fortnightly Magazine - February 15 1996

Calif. Maintains LEV Programs

Phillip S. Cross

The California Public Utilities Commission (CPUC) has approved requests by the state's major energy utilities to maintain (and in some cases expand) funding for certain programs designed to aid in the development of low emission vehicles (LEV) and infrastructure. However, the CPUC approved less than the total requested by the state's energy utilities and stressed that ratepayer funding should not be used to support utility involvement in the competitive transportation market.

Pataki Endorses LILCO Dismantlement

Lori A. Burkhart

In response to a mandate by New York Gov. George E. Pataki, a Long Island Power Authority (LIPA) advisory team has developed a proposal to dismantle the Long Island Lighting Co. (LILCO), hoping to reduce electric rates by as much as 12 percent. In response, Moody's Investors Service has changed the direction of its review of LILCO's credit ratings from negative to uncertain.

LIPA intends to create a LIPA "wire company" that would buy LILCO's transmission and distribution assets, including some payment for the Shoreham plant.

LEC Gets Price-cap Plan and Service Penalty

Phillip S. Cross

While reducing rates by $5.7 million for Citizens Utility Co.

S&P Links Retail Wheeling to Revenue Decline

Lori A. Burkhart

A new Standard & Poor's (S&P) report, Direct Access Threatens Utility Revenues, predicts that electric utility revenues would decline 6 to 16 percent ($10 to $26 billion) if retail direct access is implemented. S&P bases its findings on two scenarios: In the severe case, direct access occurs immediately for all customer classes and no surcharge mechanism recovers lost revenues. The more reasonable scenario assumes that only large commercial and industrial (C/I) users will exercise their right to choose direct access and that 50 percent of C/I lost revenues will be recovered in rates.

Virginia Reviews Municipalization Threat

Phillip S. Cross

The Virginia State Corporation Commission (SCC) has stepped into the middle of a dispute between Virginia Electric and Power Co., an electric utility, and the City of Falls Church, VA. The city had planned to displace the utility as the supplier of electricity for city residents by purchasing a minimum amount of facilities from the utility and soliciting bids for power supplies outside the local system.

S&P Investigates Effects of Competition

Lori A. Burkhart

Standard & Poor's (S&P) has released a survey of 90 state regulators and their opinions on electric utility deregulation, conducted by RKS Research and Consulting. S&P intends to use the survey to assess the "nonquantifiable risks and opportunities" of competition.

The study found that state regulators and staff do not fully support stranded-cost recovery through cost allocation at the state level. Regulators would prefer to share stranded costs among large customers, small commercial and residential customers, and shareholders.

Maryland Still Short on Telephone Numbers

Phillip S. Cross

Despite a 1992 decision to add a new area code to prevent the projected exhaustion of telephone numbers, the Maryland Public Service Commission (PSC) has approved a plan to provide additional numbering capacity within exchanges by requiring 10-digit dialing for all customers. Future telephone lines would be assigned a new area code under the approved plan, but no existing customers would be required to change their current telephone numbers.

N.Y. Legislature May Ease Tax Burden

Lori A. Burkhart

The New York State Senate Energy and Telecommunications Committee is holding a series of hearings on the phase-out of the gross receipts tax (GRT). Utilities in New York State have been arguing that the GRT and unwanted purchased-power contracts have driven the price of electricity up to a noncompetitive level. Testimony pointed out that, regardless of the methods used to introduce competition, New York state utilities would not be able to fairly compete with out-of-state suppliers.

Gladys L.

Arkansas Approves IntraLATA Competition

Phillip S. Cross

The Arkansas Public Service Commission (PSC) has approved a move to full competition in the telecommunication intraLATA toll market. The PSC has concluded that its earlier concerns regarding uneconomic duplication of facilities and erosion of revenues for the state's local exchange carriers (LECs) no longer justified keeping the market closed. According to the PSC, competition among interexchange carriers (IXCs) for interLATA traffic had benefited consumers by producing over 100 certificated carriers competing in price and packaging of services.

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