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Fortnightly Magazine - July 15 1996

Trends

Kent Knutson, Christopher Neil, and Albert Pearson

Over the past two and a half years, 10 large mergers have been announced, involving 21 investor-owned electric and gas utilities. Only the MidAmerican Energy merger has been completed, but the estimated market value of the pending mergers is an astounding $40.5 billion. Clearly, this recent wave of merger and acquisition (M&A) activity signals that electric utilities are positioning themselves for future competitive energy markets.

Results from Resource Data International's (RDI's) recent study, U.S.

N.Y. Isues Electric Restructuring Plan

Phillip S. Cross

The New York Public Service Commission (PSC) has issued a framework of goals and strategies for restructuring the electric industry in the state. The PSC directs all electric utilities in the state that have not yet initiated restructuring to file plans that will open the retail generation and energy-service markets to competition for all customer classes.

Market Structure (em PoolCo Model. The PSC adopted a "flexible retail PoolCo" model to ensure an orderly transition to retail competition.

Joules

United Parcel Service of America, Inc. (UPS) and Duke/Louis Dreyfus, LLC have struck a two-year deal to seek ways of lowering energy costs at UPS locations in 14 states.

Tokyo Electric Power Co. awarded a $500-million contract to GE Power Systems to design and build a 1,400-Mw advanced combined-cycle power plant. GE will supply four gas turbines, four steam turbines, and four generators. Additional equipment and services will be supplied by Foster Wheeler and three Japanese companies.

Electric Restructuring: To and Fro

Phillip S. Cross

Two more states at opposite ends of the country have acted substantively on electric utility restructuring (em one moving full speed ahead toward unbundling of wholesale "merchant" services, the other seeking to slow down the transition to retail wheeling.

The Nevada Public Service Commission (PSC) has released draft sections of a report on electric industry restructuring that was scheduled to go to the state legislature in June.

Maine: Self-Gen Plan Sweetens Supermarket's Rates

Joseph F. Schuler,Jr.

The Maine Public Utilities Commission (PUC) (em prompted by an 18-month fight between a utility and a customer threatening to generate its own electricity (em decided on June 10 to keep the docket open in an exit-fee case. Ironically, the fight that brought the issue to the fore was resolved 10 days earlier: On May 31, Central Maine Power Co. (CMP) and Hannaford Bros. Co.

California on QF Buyout Costs

Phillip S. Cross

The California Public Utilities Commission (CPUC) has approved a request by Pacific Gas and Electric Co. (PG&E), an electric utility, to extend balancing account treatment to payments it makes for settlements or judgments rendered in litigation of purchased-power contract disputes with qualifying cogeneration facilities (QFs).

[An earlier CPUC order authorized the utility to record payments to QFs to terminate agreements and to settle contract disputes in its adjustment-clause balancing account.

Texas PUC Develops ECOM Model

Lori A. Burkhart

To prepare a report on stranded investment mandated by the Texas legislature, the Texas Public Utilities Commission (PUC) has asked electric utilities to file the required financial information using a new model.

The model consists of six scenarios that use a number of variables approved by the PUC to yield a broad estimate of excess cost over market (ECOM) (em a measure of potential stranded costs. Each utility will file 54 "snapshots" of its potential excess-cost factors based on various competitive market scenarios and market-price assumptions.

Court Clears Way for N.H. Retail Wheeling Pilot

Phillip S. Cross

Clearing a legal challenge blocking initiation of New Hampshire's newly approved retail wheeling experiment, the New Hampshire Supreme Court has ruled that the state Public Utility Commission (PUC) has the authority to grant competing electric utility franchises. Public Service Co.

Leasing the Loop: Telephone Service Resale in the Local Exchange

Terrence J. Schroepfer, and Margarete Z. Starkey

LEASING THE LOOP:

Telephone Service Resale in the Local ExchangeResellers want steep discounts, but local rates don't always cover costs. And reselling local lines provides little incentive

to upgrade the network.The Telecommunications Act of 1996 (Act) compels local exchange carriers (LECs) to sell telephone service to competitors (em who would then resell to the public at retail. Instead of constructing their own local distribution networks, competitors would buy local telephone service from the existing carrier at discounted rates.

O&R Chastised and Moving Forward

Lori A. Burkhart

The New York Public Service Commission (PSC) has approved an

$8.5-million refund for customers of Orange & Rockland Utilities, Inc. (O&R) in light of improprieties committed by some of the utility's former senior executives (Case 96039/95E0491). Since the investigation began, O&R has terminated or retired eight of 11 senior managers and replaced its external auditing firm.

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