Keywords

Public Utilities Reports

PUR Guide 2012 Fully Updated Version

Available NOW!
PUR Guide

This comprehensive self-study certification course is designed to teach the novice or pro everything they need to understand and succeed in every phase of the public utilities business.

Order Now

Fortnightly Magazine - October 1 1996

Mailbag

I was surprised that the news item "N.Y. Issues Electric Restructuring Plan" (Courts and Commissions, 7/15/96, p. 45) neglected to mention one of the most significant aspects of the restructuring order at the New York Public Service Commission (PSC). In its May 20th order, it adopted the goal of wholesale competition by early 1997, and retail access by early 1998.

As the PSC stated: "A main benefit of setting a timetable is that it would give parties a goal and expectation that should move the process along.

Constellation Merger Set for Hearing

Lori A. Burkhart

A divided Federal Energy Regulatory Commission (FERC) has set for expedited hearing the proposed merger between Baltimore Gas and Electric Co. (BGE) and Potomac Electric Power Co. (PEPCO) to form "Constellation Energy Corp.," to determine its effect on competition (Docket Nos. EC96-10-000 and ER96-784-000).

It will also consider the applicants' proposed open-access transmission rates. An administrative law judge will certify the record to the FERC by November 1.

Mailbag

Attorney Edward L. Flippen insists it "doesn't take an economist to figure out" what will happen to electricity prices in a restructured industry that provides for open access and retail wheeling ("Radical Restructuring? Not in My State," Perspective, August 1996, p. 11).

Forgoing an economist, Flippen predicts that electricity rates will reach a national equilibrium point substantially higher than rates currently prevailing in Virginia but below rates in California.

In Brief...

Sound bites from state and federal regulators.

Economic Development Rates. Michigan rescinds existing guidelines for economic development rates in favor of "case-by-case" development and review. Case No. U-11065, July 16, 1996 (Mich.P.S.C.).

Least-cost Planning. Maine considers repeal of obsolete portions of its least-cost planning regulations for electric utilities. Dkt. No. 96-371, July 9, 1996 (Me.P.U.C.).

Gas System Acquisitions. Alabama allows Alabama Gas Corp. to buy municipal gas distribution system and include purchase price in rates. Dkt.

Mailbag

I am shocked that a respected and learned analyst of the utility industry like Charles Studness would espouse a position that stranded-cost recovery is somehow "un-American" ("Stranded-cost Recovery: It's Un-American," Financial News, July 15, 1996, p. 43).

Contrary to the claims of Mr. Studness, recovery of stranded cost is a fundamental right protected by the U.S. Constitution.

Stranded Costs: Qualified Financing for Intangible Assets

A new law could help New York utilities reduce electric rates

and improve their balance sheets.

Legislation recommended by Gov. Pataki on June 1, 1996, seeks to provide the New York Public Service Commission (PSC) with a new financial tool to address possible stranded costs as the state moves toward a competitive retail electric market.

Mailbag

Charles Studness is not the type of person I would like to loan money to. I say this because if interest rates dropped in the future he would believe he was now entitled to borrow at the lower rates and not pay me what was owed.

In his latest diatribe against stranded-cost recovery ("Stranded-cost Recovery: It's Un-American," Financial News, July 15, 1996, p. 43), Studness tells us that recovery of stranded costs will keep Americans from purchasing electricity at the competitive price.

It certainly will; however, first all debts must be paid.

SDG&E to Try Adjustment Clause for Cost of Capital

Phillip S. Cross

The California Public Utilities Commission (CPUC) has approved a proposal by San Diego Gas & Electric Co. (SDG&E) to switch to an automatic adjustment mechanism to determine cost of capital (em a move that could save the utility approximately $100,000 per year in regulatory costs.

Mailbag

Chairman Miller's prediction that consumers and not producers will set future electricity prices is correct, assuming a competitive market. His observation (em that "states that move decisively to a competitive environment and that clear their decks of the debris of electricity companies' stranded costs as quickly as possible will be the winners" (em is equally correct. But estimates of stranded investments range from $20 to $500 billion. Who will pay to clear those "decks"?

Muni Can't Skim Cream in Annexed Area

Phillip S. Cross

The Utah Supreme Court has ruled that a municipal utility must serve all customers in new areas that it takes over by annexation (em not just a select few.

Moreover, the city must compensate the former supplier of utility services for any dedicated facilities, even if it uses its own municipal facilities to serve the new area. However, the city will owe compensation for lost profits only if the municipality fails to obtain the prior consent of the supplier or to pay for the cost of the associated facilities.

Pages