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Fortnightly Magazine - May 15 1996

Penn Power Asks for 10-Year Rate Plan

Lori A. Burkhart

Pennsylvania Power Co. (PP) has asked the Pennsylvania Public Utilities Commission (PUC) to approve a 10-year "Rate Stability and Economic Development Plan," which includes a freeze on electric rates until May 1, 2006; enhanced customer assistance programs; rate incentives; and reduction of fixed costs and regulatory assets.

Rates would not be affected by future PP decisions on new generating capacity, removing or retiring generating facilities from service, or bulk-power purchases.

Nova Scotia Continues IRP, Favors Electric TOD Rates

Phillip S. Cross

The Nova Scotia Utility and Review Board has directed Nova Scotia Power Inc., an electric utility, to design and submit time-of-day (TOD) rates based on energy costs for all classes of customers except residential users. At the same time it denied a call for less emphasis on resource planning, and disallowed half the costs incurred for an executive compensation incentive program.

The Board rejected a proposal by the utility to redesign rates to reflect time of use by implementing seasonal rates, using on-peak demand levels for billing purposes.

U S WEST Problems May End Alternative Regulation

Lori A. Burkhart

The Oregon Public Utilities Commission (PUC) has begun formal action against U S WEST Communications, Inc., alleging noncompliance with service-quality standards. The PUC will decide whether to continue, modify, or terminate its regulatory agreement with that company. Staff have recommended that the PUC terminate alternative regulation for U S WEST.

PUC staff first found the company out of compliance with standards in 1994. Although the situation stabilized for a few months, network performance has deteriorated.

Maine Tightens Ex Parte Rules

Phillip S. Cross

The Maine Public Utilities Commission (PUC) has approved amendments to existing rules governing ex parte and other communications designed to influence the decisionmaking process in adjudicatory proceedings.

It found the changes necessary after representatives of New England Telephone and Telegraph Co. dba NYNEX, a local exchange carrier (LEC) regulated by the PUC, were reported engaged in lobbying activities.

Moody's: Duke Stock Repurchase Stable

Lori A. Burkhart

Moody's Investors Service has confirmed the credit ratings of Duke Power Co. (DP) despite the utility's decision to repurchase up to $1 billion in stock by 2000. Moody's expects DP to maintain its 'Aa2' senior secured bond rating. DP management intends to repurchase the stock while allowing a gradual increase in the retained earnings cushion. The program was designed to absorb the substantial cash inflow caused by the reversal of the Catawba power plant purchased-capacity levelization in 1996 and by the utility's declining capital expenditure needs.

Off Peak

Martin Schweitzer and Miriam Pye

Can DSM live with

competition?

Between 1992 and 1994, demand-side management (DSM) spending grew at a median annual rate of 16 percent for a survey group of 37 electric utilities (those reporting DSM expenditures of at least $5 million for 1993). For 1994-98, however, the same utilities project a median annual decline of 3 percent in their DSM expenditures. (Taken together, the 37 utilities - located primarily along the east and west coasts and in the industrial Midwest - accounted for 51.9 percent of all DSM expenditures for U.S.

Leaseback Transaction a First

Lori A. Burkhart

Old Dominion Electric Co-op. (ODEC) has entered into a leaseback financing transaction with First Union National Bank that could save its 12 member systems about $4 million per year. First Union leased Unit One of the Clover Power Station from ODEC for 22 years with an upfront cash payment of $47.5 million, then leased it back to ODEC.

Selected Energy Stock Performance: First Quarter 1996

Annual Annual EPS

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

Company Region 12/29/95 03/29/96 Change High Low Rate Yield Value Ratio 12 Mos.

Electric Utilities

AEP Company Inc.

Perspective

Frank Clements

Since the federal Court of Appeals decision in the Calvert Cliffs case over 25 years ago, no power plant may be built without a thorough socioeconomic impact statement. Yet, schemes to alter the entire supply system of a state - or even the nation - are currently proposed with only cursory attention to socioeconomic consequences.

Stranded Costs: Is the Market Paying Attention? (A Look at Market-to-Book Ratios)

Agustin Ros, John L. Domagalski, and Philip R. O'Connor

Investors are taking stock

of utility exposure to price competition.The utility trade press and even the general financial press have featured the views of regulators, utility executives, legislators, and various consumer advocates on the stranded-cost question. Stranded costs easily represent the most contentious issue facing the electric industry as it moves to an era of competition.

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