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Fortnightly Magazine - April 15 1996

Raytheon Benefits From "Secret" Contract

Lori A. Burkhart

The Massachusetts Department of Public Utilities (DPU) has approved a discount electric rate contract for defense contractor Raytheon Co., a customer of Massachusetts Electric Co. (ME). But the secrecy surrounding the contract has created an uproar.

Although the terms of the contract are confidential, Raytheon said the three-year contract would yield "significant savings" on its $20-million annual electric bill. ME called the discount an "economic development" contract, which would keep Raytheon and its 17,500 employees from leaving the state.

PSC Scales Back Residential Subsidy

Phillip S. Cross

The Michigan Public Service Commission (PSC) has directed Consumers Power Co. to scale back any residential rate subsidies. The order appeared during a review of a proposed settlement in a series of applications to increase rates, revise depreciation methods, and offer discounts to industrial customers.

The PSC added, however, that the company should not try to eliminate the entire subsidy in a single step.

Boston Edison Proposes Real-Time Pilot

Lori A. Burkhart

Boston Edison has proposed a unique pilot program that would allow 10 large customers to test hour-by-hour pricing. Although the one-year pilot is not a rate discount program, it would offer participants 10 percent off their demand charge (em in effect, a 4-percent discount. The pilot simulates a market price using a computer model that relays an hourly breakdown of costs to the customers. If the customers are able to respond and move their load around, they may save; if not, their electric bill may remain the same, or perhaps rise.

Yellow Pages Ruling Reversed

Phillip S. Cross

According to the Arizona Court of Appeals, the state Corporation Commission has violated an agreement with U S WEST Communications, Inc., governing the spinoff of the company's Yellow Pages publishing business as an unregulated enterprise.

The court agreed with U S WEST that the commission erred when it imputed $60.684 million in directory publishing profits to the carrier's regulated operations (em a move that had captured all profits earned by the publishing company above the rate of return of 11.4 percent authorized for regulated services.

Perspective

Richard D. Cudahy

Ah, the wonders of competition! Out with waste, in with efficiency. The prospects are exciting. So why look back wistfully?

If there is anything more abhorrent than wife-beating and drug abuse, surely it must be monopoly. Monopoly is un-American: To the economist it represents the very state of original sin. To the courts it ranks with conspiracy. Monopoly promises economic waste, throttled production, obscene profits, and naked power (em all rolled into one. Consider what used to be called the "public utilities." In that sphere, regulated monopoly flourished for many years.

Rival Wins Gas Franchise in N.C.

Phillip S. Cross

The North Carolina Utilities Commission (NCUC) has granted a final certificate to Frontier Utilities of North Carolina, Inc., to provide natural gas local distribution service to four previously unserved counties. It found Frontier's proposed rates reasonable when compared to alternate energy sources in the four-county area, though somewhat higher than those proposed by Piedmont Natural Gas Co., Inc., an established LDC that had also applied for the franchise.

Frontier is a new company formed specifically to serve the four counties.

Energy Service Companies: No More Mr. Niche Guy

Joseph F. Schuler, Jr.

The larger companies are winning more business. But how will

they fit into a restructured industry?

Put 45 energy service companies (ESCos) into a $1-billion market, and they easily average over $20 million each. That's almost four dozen companies exploiting a niche an eighth the size of the microprocessor industry.

So it's easy to understand why new ESCos, half with utility roots, enter the fray weekly.

NARUC in Winter

Joseph F. Schuler, Jr.

Resolutions generated heat (electricity) and warmth

(telecommunications, environment).

State utility commissioners have gone on record asking Congress to "call them first" before it legislatively restructures the electric industry.

That resolution prompted some of the liveliest debate at the National Association of Regulatory Utility Commissioners' (NARUC) Winter Committee meetings. About 1,000 people attended the 10-day event in Washington, DC, February 21 to March 1.

Gas Restructuring Leaves Doubts About IRP

Phillip S. Cross

In a case reviewing standards for integrated resource planning (IRP) set out in the Energy Policy Act of 1992 (EPAct), the Pennsylvania Public Utility Commission (PUC) has recognized that changes in the natural gas industry, combined with an evolution toward competition (both upstream and inside the city gate), "will make gas IRP a less-necessary commission function in order to insure least-cost gas service."

The PUC said most of its existing regulations were consistent with the federal standards; however, it rejected the EPAct standards regarding guaranteed profitability an

Electric Vehicles: The Case for (and Against) Incentives

Andrew Ford

California's retreat from its zero-emission targets eases the pressure on utilities, making time for a fresh look at public and private efforts.

Electric vehicles (EVs) hold interest for utility companies around the world.

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