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Fortnightly Magazine - June 15 1996

Mergers: Driven by Dividends?

Chris Neil, and Albert Pearson

The movement to introduce competition in the electricity industry comes at a time when many utilities are already ailing or underperforming. In fact, since 1990, half of U.S. investor-owned utilities (IOUs) have failed to consistently grow their dividends, or have cut or eliminated them altogether. According to a new study by Resource Data International, U.S. Electric Utility Industry Merger and Acquisitions, 1996, the current trend toward mergers and acquisitions is fueled by a desire to improve shareholder returns.

LG&E Withdraws from EEI

Lori A. Burkhart

LG&E Energy Corp. and subsidiary Louisville Gas and Electric Co. (LGE) have withdrawn from the Edison Electric Institute (EEI) over the issue of electric restructuring.

In a letter to EEI president Thomas Kuhn, LG&E chairman and CEO Roger Hale said that LG&E advocates competition and retail access at the earliest possible date through federal legislation.

Off Peak

Long-distance telephone rates for U.S. businesses dropped 7.9 percent from February 1995 to February 1996, according to the International Telecommunications Price Survey, released by National Utility Service, Inc. on April 16. At the same time, local calling rates decreased by only 1.5 percent.

Frontlines

Bruce W. Radford

I confess. I haven't yet read the Federal Energy Regulatory Commission's Order 888.

NRC OK's Trojan Decommissioning Plan

Lori A. Burkhart

The Nuclear Regulatory Commission has approved Portland General Electric Co.'s (PGE's) decommissioning plan for the Trojan nuclear power plant. The Trojan plant, which began operating in 1975, was permanently shut down in January 1993. PGE filed its decommissioning plan in January 1995, proposing to move the spent fuel to onsite dry cask storage, dismantle radioactive structures, and decontaminate the site for unrestricted use (except for the dry-cask storage area). t

Lori A. Burkhart is an associate legal editor of PUBLIC UTILITIES FORTNIGHTLY.

People

Nancy Schultz was promoted to engineering and construction services director at Transcontinental Gas Pipe Line Corp. She joined Transco in 1982.

Columbia Energy Services has hired Greg Davis at its Pittsburgh office. He previously worked for the Natural Gas Clearinghouse and Exxon Corp.

James S. Thomson has joined Consolidated Natural Gas Co. as president of its new subsidiary, CNG International Corp. He last worked at Edison International's Mission Energy Co.

Westinghouse Electric Corp. has promoted Randy H.

Financial News

Charles M. Studness

In April, Texas Utilities announced that it would buy ENSERCH, Western Resources launched a hostile takeover bid for Kansas City Power & Light, and The Southern Co. initiated its ultimately futile bid for the United Kingdom's National Power. Eight other pending mergers involving major electric utilities have been announced during the last year. Utility managements clearly believe their future success requires merging with other utilities.

Joules

The U.S. Department of Energy will make $15 million in grants available to those willing to buy early versions of market-ready fuel cells. DOE will provide $1,000 per kilowatt, or up to a third of costs. Assistance will target buyers that want to purchase between 100 and 3,000 kilowatts. The first round of awards will be made by September 30. The application package is available on the Internet at http:/www.metc.doe.gov/business/ solicita.html. A diskette version (WordPerfect 5.2) may be requested by fax: (304) 285-4683, attn: R. Diane Manilla, M.S.

In Brief...

Sound bites from state and federal regulators.

Primergy Merger. Michigan regulators have OK'd the merger between Wisconsin Electric Power Co. and Northern States Power Co. The settlement assumes about 2 percent in cost savings on combined Michigan revenues, and imposes a four-year moratorium on rate hikes. Case No. U-10913, April 10, 1996 (Mich.P.S.C.).

Gas Pipeline Certification. Michigan certifies Thunder Bay Pipeline Co., L.L.C.

Mass. Study Finds Stranded Costs Really Assets

Joseph F. Schuler, Jr.

Five Massachusetts electric companies stand to gain more from industry restructuring than they would lose in stranded investment.

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