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Fortnightly Magazine - October 15 1996

Generation, Deregulation, and Market Power: Will Antitrust Laws Fill the Void?

Stephen L. Teichler

Monopoly rents? Not in the short run. The real enemy is a price war, fueled by indifference to stranded costs. And when that happens, antitrust laws won't offer much help.Competition has formally begun in the electric service industry. The Federal Energy Regulatory Commission (FERC) has issued Order 888, giving generators access to wholesale loads throughout the nation.

INGAA Sees Lessons for FERC in Pipeline Stranded Costs

Lori A. Burkhart

The Interstate Natural Gas Association of America (INGAA) has released a background report from its rate and policy analysis department that compares natural gas and electric restructuring costs. INGAA feels the gas industry experience offers lessons for federal and state regulators as they debate potential stranded costs from electric industry restructuring.

INGAA notes that the interstate pipelines had to adopt open access and provide their customers with choices before their stranded-cost liabilities were settled.

Maine Oks Jump in Price Cap

Phillip S. Cross

The Maine Pubic Utilities Commission (PUC) has allowed Central Maine Power Co. to boost rates by 1.26 percent under an alternative rate plan approved in late 1994. The increase is based in part on an indicated inflation rate of 2.55 percent for the last quarter of 1996.

The PUC found considerable disagreement on whether the rates proposed by the utility would capture the full benefits from restructuring a number of the utility's purchased-power contracts with qualifying cogeneration facilities (QFs).

Mergers and Market Power: Should Antitrust Rule?

Robert J. Michaels

By Robert J. Michaels

The Justice Department's Guidelines don't tell us very much about

today's (or tomorrow's) electric market.

However many electric utilities remain after this merger wave, competition will be forever changed.

PJM Pool Moves Forward

Lori A. Burkhart

PECO Energy Co. has filed its "Open Market Plan" at the Federal Energy Regulatory Commission (FERC) for restructuring the Pennsylvania-New Jersey-Maryland (PJM) power pool. PECO is the only member not joining a majority PJM restructuring order filed July 24 with the FERC.

The plan proposes an independent system operator (ISO) and electric transmission service priced on a regional, postage-stamp basis. The wholesale market would be based on bilateral transactions, with a residual pool for hourly energy.

Court Oks PUC Review of "Sham Transaction" Claim

Phillip S. Cross

The Ohio Supreme Court has cleared the way for state regulators to review a complaint by Cleveland Electric Illuminating Co. that American Electric Power (AEP), a utility holding company, used one of its electric generating subsidiaries, Ohio Power Co., as a "straw man" to circumvent the state's utility service territory laws and serve one of its retail customers.

Deregulation and Mergers: Is Consolidation Inevitable?

Richard D. Cudahy

Antitrust is not another form of regulation. Antitrust

is an alternative to regulation

and, where feasible, a better alternative.

(em Stephen G. Breyer,

"Antitrust, Deregulation, and the Newly Liberated Marketplace,"

75 Calif. Law Rev. 1005, 1007 (1987).

In Brief...

Sound bites from state and federal regulators.

Gas Competition. Indiana finds that competition in the gas industry has "not directly benefitted" residential and small commercial customers, in first annual report to legislature on energy policy. July 1, 1996 (Ind.U.R.C.).

Gas DSM. Idaho cites declining need for demand-side management in light of new appliance efficiency standards. Tells Intermountain Gas Co. to end water heater rebates. Case No. INT-G-96-4, Order No. 26546, Aug. 1, 1996 (Idaho P.U.C.).

Gas Price Forecasts.

Maine Finds Electric Price Cap Unnecessary

Phillip S. Cross

The Maine Public Utilities Commission (PUC) has decided to forgo a formal price-cap plan for Bangor Hydro-Electric Co. (BHE), an electric utility, finding that traditional regulation would better maintain the proper balance of shareholder and ratepayer interests. The PUC had approved a price-cap mechanism for Central Maine Power Co., another of the state's investor-owned electric utilities (see, Re Central Maine Power Co. 159 PUR4th 209 (Me.P.U.C.

Frontlines

Bruce W. Radford

One thing that adds some fun to my job (notice, I did not say that my job is fun) is the chance to compare similarities between the gas and electric markets.

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