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Fortnightly Magazine - June 15 1996

Electric Competition in New Zealand: Putting Last Things First

Chris Pleatsikas, and Bruce Turner

First it deregulated generation.

Then distribution (no more exclusive franchise).

Only now is New Zealand turning

to the wholesale market.

A decade ago New Zealand's economy was suffering from prolonged stagnation. The country relied too much on the public sector.

Duquesne Proposes Marginal Pricing

Lori A. Burkhart

Duquesne Light Co. proposes to charge wholesale customers marginal cost-based rates to transmit electricity over its system. The company's April 15 filing asks the Federal Energy

Regulatory Commission to allow it to charge only marginal transmission costs (cost incurred due to additional electric power being transmitted on the system), and no embedded costs (fixed investment in plant and other facilities).

Penn. Eyes New Role Under Telecom Act of 1996

Phillip S. Cross

The Pennsylvania Public Utility Commission (PUC) has issued a "tentative" statement identifying specific areas of state regulation that might require alteration or adjustment under the Telecommunications Act of 1996.

It emphasized that federal law appears to preempt its authority to restrict market entry on public interest grounds, but at the same time will impose "far-reaching" responsibilities regarding interconnection and universal service, plus activities "in areas and functions previously unknown to this Commission."

Among other things, it suggested converting al

The Salmon Strategy: Power Swims Upstream to Canada.

Stephen Maloney

Probably the quickest way to get punched out in Toronto is to call Canada the 51st state. But let's face it,

the border is getting murky, like power markets.

Aren't we supposed to be importing power from Canada? Didn't the NIMBY syndrome kill off baseload generation construction, making our provincial neighbors the source of our power and raw materials? Then why are companies like Northeast Utilities suddenly seeking permission to export power to the provinces?

Southern Natural Gas Order Upheld

Lori A. Burkhart

The Federal Energy Regulatory Commission (FERC) generally has denied rehearing of its comprehensive September 29 rate order concerning Southern Natural Gas Co. (SNG). The order settled 23 rate cases, resolved the company's costs associated with the transition to Order 636, and refunded about $150 million to customers. Last September, FERC chair Elizabeth A.

Local Rules Fall Under Telephone Price Cap

Phillip S. Cross

The Wisconsin Public Service Commission (PSC) has completed its mandated annual review under a price-cap plan elected in 1994 by Wisconsin Bell, Inc., saying the company must reduce rates for intraLATA message telecommunications service (MTS) under the price-cap formula.

Australia: Open Arms, Open Access, and the Outback

Joseph F. Schuler, Jr.

U.S. utilities find

a wealth of opportunity

down under.Australia.

It drew more than $7 billion in investment from U.S. electric utility subsidiaries at the end of 1995. Ongoing privatization will likely draw billions more.

Five electric distribution companies and a generating company have been sold in Australia's southeastern State of Victoria, and four more generating companies are expected to go on the block.

Idaho Power Wins Favorable IRS Ruling

Lori A. Burkhart

The Internal Revenue Service (IRS) has issued a favorable ruling allowing Idaho Power Co. (IP) to accelerate amortization of accumulated deferred investment tax credits (ADITC). [Idaho Power had asked the Idaho Public Utilities Commission for permission to defer and amortize costs associated with its internal restructuring.] The ruling enables the utility to accelerate amortization of ADITC when its consolidated year-end return on common equity falls below 11.5 percent.

Idaho OK's Sale of Teleco Exchanges

Phillip S. Cross

The Idaho Public Utilities Commission (PUC) has reversed a series of earlier rulings and has now allowed U S WEST Communications, Inc. to sell certain rural telephone exchanges to small independent local telephone carriers. Putting aside prior concerns that excessive sales prices would impose higher rates, the PUC found that projections of the ratio of purchase price to net book value had been overstated. It said the ratio had improved with recent increases in plant investment, as well as from a plan by U S WEST to contribute funds to replace switches in the sale exchanges.

Numbers That Make Sense: Gauging Nuclear Cost Performance

Michael R. Fox, and J.P.M. Maidment

Dwindling economic competitiveness has plagued the nuclear power industry for

some years. In the industry's early years, some reactors were completed for less than $100 million. Experience gained overseas (often in projects with American partners) provides sobering evidence that nuclear reactors can still be built at low cost in short periods of time.

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