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Fortnightly Magazine - March 1 1996

Moody's Finds Northeastern Utilities Under Pressure

Lori A. Burkhart

A new report by Moody's Investors Service, Northeast Break-Even Analysis, finds that wide variations in the cost structures of investor-owned, municipal, and state electric utilities in the Northeastern United States will disadvantage the majority under deregulation in relation to their peers in contiguous regions. If full competition is introduced, Moody's concludes that the credit quality of Northeastern utilities with above-average costs would likely deteriorate because some investments are unrecoverable from ratepayers.

Tribe's Choice Causes Lawsuit

Lori A. Burkhart

Madison Gas and Electric Co. (MGE) has filed a lawsuit in court and a complaint at the Wisconsin Public Service Commission (PSC) against Wisconsin Power & Light Co. (WP&L), because WP&L will provide electricity to the Ho-Chunk Tribe's new bingo hall, located in MGE territory.

The 43-acre site does not currently receive service from either utility, but both have distribution infrastructure nearby.

Perspective

Robert L. Hirsch

With little fanfare, most aspects of the U.S. energy system seem to have settled into a fairly stable, predictable pattern. To my mind, we have reached an "energy plateau" likely to persist for maybe a decade or more into the future.

Energy is not now high on the radar screen of the general public, so there is little public pressure for significant change in the U.S. energy system.

Power Pundits Make Their Pitches

Joseph F. Schuler, Jr.

Two congressmen and a Clinton Administration official recently weighed in on the future of electric industry deregulation, giving observers an inkling of what they might expect in legislation or policy this year.

Sen. J. Bennett Johnston (D-LA), the ranking minority member of the Energy and Natural Resources Committee, spoke before the Electric Generation Association (EGA) January 22. Just three days later he introduced S. 1526.

Mojave Gets Green Light, But Troubles Persist

Lori A. Burkhart

The Federal Energy Regulatory Commission (FERC) has issued an order denying rehearing, effectively allowing Mojave Pipeline Co. (MP) to construct and operate its Northward Expansion Facilities in California (Docket No. CP93-258-007). The FERC has already issued five substantive orders in the proceeding.

Especially contentious was the clash with the California Public Utility Commission (CPUC) over jurisdiction, leading to a February 1995 FERC order holding that the Northward Expansion was an interstate pipeline subject to federal oversight.

Selected Energy Stock Performance: Fourth Quarter 1995

Annual Annual EPS

Close Close Percent 52-Wk 52-Wk Div Div Book P/E Last

Company Region 10/02 12/29 Change High Low Rate Yield Value Ratio 12 Mos.Electric Utilities

AEP Company Inc. Midwest 36.13 40.50 12.11 40.63 31.25 2.40 5.93 22.68 15 2.71

Unicom Corp.

To Pool or Not to Pool? Toward a New System of Governance

Charles G. Stalon

What are the essential characteristics of the system of governance that will be required for a new, North American electric industry with interconnected and interdependent transmission networks and trading areas?

Electric transmission networks are natural monopolies, as are the many independent network

control systems that coordinate the use of generators and loads and preserve system reliability.

The Year Ends With a Bang

Public utility stocks showed no signs of letting up during the fourth quarter of 1995. The Public Utilities Stock Index rallied a brisk 234.66 points, or 6.38 percent, to close at 3910.01. Not to be outdone, the Dow Jones Industrial Average gained 355.86 points, or 7.47 percent, to close at 5117.12, and the S&P 500 Stock Index climbed 34.21 points, or 5.88 percent, to close at 615.93.

Certain stocks sparkled more than others:

SCANA Corp.

The Power Exchange: California Goes Competitive

Alex Henney

Nearly three years on from the Yellow Book,1 after many long hours and thousands (em if not millions (em of pages, and following much bitter debate (linked with some murky politics), the California Public Utility Commission (CPUC) by a 3-2 majority has at last published an Order2 to introduce competition for retail customers.

The decision contains four main proposals:

s market structure

s access for custo

Colorado Revamps DSM Inquiry

Phillip S. Cross

The Colorado Public Service Commission (PSC) has renewed its commitment to rate recovery of costs associated with utility-sponsored demand-side management (DSM) programs. At the same time, however, it has formally rejected a series of broader-based rate reforms under development since 1991. The rulings came in a case involving the Public Service Co. of Colorado, an electric utility. The PSC found a "ubiquitous lack of support" for mechanisms to encourage utility conservation investments that could reduce total system costs, but might also reduce sales levels.

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