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Fortnightly Magazine - July 15 1996

State PUCs: Still Setting the Agenda

Joseph F. Schuler, Jr.

Quizzed by lawmakers, and buffeted by political winds, regulators ponder an uncertain future.

Agree or not, utility commissioners are part judge, part regulator, and part politician.

Schaefer Pushes Restructuring

Joseph F. Schuler, Jr.

Rep. Dan Schaefer (R-CO), closed his final hearing on electric industry restructuring with what sounded like a promise to push utilities down the bumpy path of retail wheeling.

"My vision for the future is one where all consumers have the ability to pick and choose among numerous competitive suppliers of electricity," Schaefer said. "It is one where all consumers have the benefit of lower rates, better services, and new innovations brought on by competition . . .

LDC to Sell Production Facilities to Affiliate

Phillip S. Cross

The West Virginia Public Service Commission (PSC) has authorized Hope Gas, Inc. to sell its production facilities to an affiliate, CNG Producing Co., for the current book value of the properties, $4.512 million. The DPUC emphasized that it would rely on representations that Hope Gas would work to reduce the risks to its ratepayers for lost and unaccounted-for gas by pursuing meter relocation on a prioritized basis.

The Discount Debate: Recent PUC Rulings On Local Exchange Resale

Now that incumbent LECs must offer all services for resale, state regulators must decide the appropriate level of discount for the new resale tariffs.

Discounts could put incumbent LECs at a disadvantage, since many local exchanges already price below the cost of service, particularly for basic residential access.

FERC Responds to EPA's Open-access Challenge

Lori A. Burkhart

On May 13, Environmental Protection Agency (EPA) Administrator Carol M. Browner referred the Federal Energy Regulatory Commission's (FERC's) open-access rule, Order 888, to the Council on Environmental Quality (CEQ). In effect, Browner has asked the Clinton Administration to intervene in the restructuring process.

Browner feels that under certain circumstances the open-access rule could lead to future increases in air pollution. She believes these impacts can be minimized through a combination of actions by EPA and states under the Clean Air Act (CAA).

Discount Rates Urge Restructuring in Penn.

Phillip S. Cross

The Pennsylvania Public Utility Commission (PUC) has authorized Duquesne Light Co. to expand its economic development rate initiatives to include small industrial customers. The new rate rider provides a five-year discount on demand charges on a maximum of 100 kilowatts (Kw) for new or existing customers smaller than 100 Kw. If the utility's service territory is to recover from the steel industry's devastating downturn, the PUC argued, Duquesne must be able to offer a competitive rate to keep industrial operations of all sizes.

Model and Parameters

Objective. Estimate market impacts of "1+" dialing parity plus eliminating traditional LATA boundary.

Model. Measure shifts in market dominance between major competitors, by assuming price changes and estimating revenue impacts across range of demand elasticities, to reflect both changed rates and market shares. Also consider changes to revenues collected by U S WEST through carrier access charge (CAC).

Scope. Limited to residential toll calls carried by AT&T and U S WEST. Does not examine commercial toll customers.


Filing Announces New Generation of Mergers

Lori A. Burkhart

Two utility merger lawyers at LeBouef, Lamb, Green & MacRae predict that the Federal Energy Regulatory Commission (FERC) will continue to receive many merger applications, though some will differ from the classic merger between neighboring utilities. Douglas W. Hawes and Samuel Behrends IV have filed comments in the FERC's merger rulemaking proceeding, recommending that the FERC implement "fast track" proceedings for the next generation of mergers.

Off Peak

While the cost of common household goods like bread and milk increased 77 and 50 percent, respectively, from 1985 to 1995, the average residential electricity bill for customers of San Diego Gas & Electric Co. (SDG&E) dropped 13.6 percent over the same period, according to San Diego Chamber of Commerce statistics.

That trend shows no sign of abating. In fact, low rates are fast becoming a staple for the utility's 1.2 million electric customers.

Discounts Defined

Flexible pricing schemes generally fall into four categories:

Load Retention Rates. Can prevent a customer from exiting system, either by relocating or choosing to self-generate. If retail competition is allowed, load retention rates can prevent customers from choosing a different generation company.

Economic Development Rates. May attract new customers to a service territory, or encourage existing customers to expand operations and boost demand. Differ from load retention rates by purporting to create jobs.

Flexible Rates (Flexrates).