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Fortnightly Magazine - June 1 1996

Fitch to Rate Power Marketers

Lori A. Burkhart

Fitch Investors Service has developed guidelines to rate electric power marketers The firm estimates this "fastest-growing segment" of the changing electric industry could handle as much as $200 billion in annual sales once full deregulation occurs.

According to Fitch, an investment-grade credit rating for power marketers (em "BBB" or better (em would expand the potential amount and scope of their business and help them avoid restrictive counterparty limits as electricity is traded among firms.

N.C. Sets Rules for Local Telco Competition

Phillip S. Cross

The North Carolina Utilities Commission (NCUC) has adopted a "minimal" regulatory structure for newly certified, competitive local-exchange telephone carriers (LECs), and has revised existing interim rules governing certification, interconnection, number portability, and universal service in the newly opened markets.

Settling "one of the most contentious issues" in the local competition debate, the NCUC agreed that resale of local service should be permitted, but found it could not yet determine the exact nature and extent of the resale opportunities it would require.

Texas Utility Pushes Pooling

Lori A. Burkhart

Central and South West Corp.'s subsidiary, Central Power and Light Co. (CPL), has proposed that all ERCOT nonnuclear utilities (em including IPPs, co-ops, and municipals (em become part of a competitive wholesale bulk power pool run by an independent system operator (ISO).

Transmission and distribution companies would continue to own and operate power lines, purchase all nonnuclear generation from the pool, and assume responsibility for actual delivery.

Idaho Wants Earnings Shared for System Upgrades

Phillip S. Cross

Once again, the Idaho Public Utilities Commission (PUC) has chosen a revenue-sharing program to allocate earnings by local-exchange carrier (LEC) U S WEST Communications, Inc. to network modernization, rural zone rate reductions, and other system improvements, rather than to broad-based rate refunds.

U S WEST must share a portion of earnings with local-exchange callers under an alternate regulation plan it elected in 1989. During the plan's first two years, the PUC had directed available sharing funds returned to local subscribers as one-time credits.

Texas-New Mexico Power Proposes Choice

Lori A. Burkhart

Texas-New Mexico Power Co. (TNMP) has asked the Texas Public Utility Commission to approve "Community Choice," which would allow state customers to choose their energy providers beginning in January 1997. After a five-year transition period, customers would be permitted to choose both their electric and energy services providers. During the transition, TNMP would be allowed to reduce the stranded costs of its only generating plant, TNMP One, by keeping rates, including fuel and purchased-power costs, at current levels.

LDC to Aggregate for Marketers

Phillip S. Cross

The Ohio Public Utilities Commission (PUC) has authorized Columbia Gas of Ohio, Inc. to offer aggregation services free of charge to marketers, brokers, producers, or customer groups responsible for delivery of gas supplies to its city gates on behalf of end-users. (But Columbia will seek approval of a service charge in its next rate case.)

The PUC says the new service allows aggregation of customers by agents for scheduling and nominating gas, banking and balancing, and other distribution functions. Re Columbia Gas of Ohio, Inc., Case No. 96-159-GA-ATA, Mar.

After Stranding Recovery, What?

Robert J. Michaels

Intense though it has been, the debate over stranded electric investment has addressed only half of the issue. What the utilities will do with the money is as important as whether they should recover anything at all.

Retail competition will accelerate the decline of utility-owned generation; utilities will rely less on their own production and more on purchased power to serve their remaining customers.

Tennessee to Protect Small LECs

Phillip S. Cross

Tennessee law permitting new competition in the local-exchange telephone market clearly protects the state's small incumbent local carriers (LECs with fewer than 100,000 access lines) from market entry by competitive carriers, according to the state public service commission (PSC), unless the incumbent voluntarily elects competition either by executing an interconnection agreement with a local competitor, or by applying for a certificate to provide service outside its franchised service area.

Separate certificate hearings for new market entrants would be inefficient and w

Electric Mergers: Transmission Pricing, Market Size, and Effects on Competition

Carmen D. Legato

The prospect of deregulation has induced a wave of mergers among electric utilities. Most of these mergers would fail an antitrust review because, by combining generation assets of interconnected utilities, they have substantially reduced potential competition in generation.

The Feds Can Lead...By Getting Out of the Way

Steven M. Fetter

Stranded investment is mostly intrastate.

Let the states work free of uncertainty.

Recent activity in both chambers of the U. S. Congress shows federal lawmakers seeking to help the electric industry move toward competition. More than likely, election-year politics will stand in the way. Even so, Congress can go one better: It can step aside and let the states lead the way.

The greatest concern lies in stranded costs (em utility assets and obligations valued on company books at above-market levels.

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