You've heard talk lately about the convergence of electricity and natural gas. That idea has grown as commodity markets have matured for gas and emerged for bulk power.
The Massachusetts Department of Public Utilities (DPU) has approved a new
"market-based" electric tariff for Fitchburg Gas & Electric Co., a combined electric and gas utility. The "Energy Bank Service" for new or expanding industrial customers offers rates competitive with average U.S. industrial rates. Fitchburg presented the new rate offering as consistent with the state's restructuring goals of greater customer choice and access to wholesale market prices, but the DPU rejected the utility's argument that new discount customers should be exempted from any specific stranded-cost charges in the future.
Fitchburg claims no current excess capacity and intends to meet the power requirements for the new wholesale service offering through short-term contracts of one month or less. The DPU ruled that the utility's proposal deserved stricter scrutiny than other discount proposals recently approved for utilities with extra power to sell. Nevertheless, it found that revenues would more than offset incremental power costs, and that separate fuel procurement and accounting procedures devised by the utility would enable the DPU to determine whether the new service offering affected costs for other ratepayer groups. The DPU directed the company to include in the new tariff a statement that the structure and design of the new rate might change as a result of the implementation of a restructuring plan for the utility. Re Fitchburg Gas and Electric Co., D.P.U. 95-75, Nov. 30, 1995 (Mass.D.P.U.).
The Missouri Public Service Commission (PSC) has refused to approve a Kansas City Power and Light Co. (KCPL) generic tariff for special contract offerings to large industrial customers. The proposed service would have allowed the utility to "flex down" from rates in its established Primary Large Service tariff to meet competitive threats. KCPL proposed to restrict the discount service to customers with demands of 1,000 kilowatts or greater that are targeted by competitive energy suppliers. Service would be priced at a rate not less than the greater of 1.3 cents per kilowatt-hour on an annual average basis or KCPL's annualized incremental cost per kilowatt-hour. The PSC rejected allegations that special rate contracts were unlawful and also ruled that the protection of confidential business information associated with the contracts was within its authority (em while concluding that a generic tariff for discounts should be considered as part of an investigation of the utility's overall rate design. Nevertheless, the PSC found that the type of competition currently facing the utility could require a "bundled service" offering of the type suggested by the utility. It added that an unbundled service offering with a price ceiling and price floor for each service component might also be necessary in "preparation for the full range of competition" in the utility's service territory. Re Kansas City Power and Light Co., Case No. EO-95-181, Dec. 6, 1995. (Mo.P.S.C.).
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