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Fortnightly Magazine - November 15 1996

1996 Regulators' Forum

Joseph F. Schuler, Jr.

As electric restructuring rockets to the top of state public utility commission agendas, regulators find themselves pushed in every direction. Pushing the hardest, in most cases, are legislators, who, like commissioners, are being lobbied by utilities, industrial consumers, and sometimes, residential customers. Each party has its agenda. Some wield more clout than others.

Public Utilities Fortnightly asked eight commissioners about the demands of restructuring and about an issue particular to their state.

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Comments by P.

Financial News

Philipp Degens and M. Khawaja

Imagine That!

A Stock-price Premium for DSMA rise in DSM spending (as a percentage of total expenditures) indicated

an increase in market-to-book ratio.

For electric utilities, financial and managerial attributes such as rate of return or the dividend payout ratio often exert a strong positive effect on the market-to-book (M/B) ratio (em the ratio of the company's stock price divided by book value.

Nuclear Decommissioning Trust Funds: Rethinking the Approach

Donald H. Korn

Analogous to a pension fund,

a decommissioning trust suffers the same vulnerabilities.

In Brief...

Sound bites from state and federal regulators.

Telco Interconnection Rules. Federal appeals court enjoins pricing aspect of rules published August 8 by the Federal Communications Commission to govern sale at wholesale of local exchange service elements by Bell system local carriers to new competitors (who would resell such elements to provide competitive local telephone services). Finds possibility of irreparable harm plus likelihood that Bell carriers might prevail on the merits of jurisdictional issues. No. 96-3406, Oct. 15, 1996 (8th Cir.).

Exceptions to the Rule: Bypassing the California Transition Charge

Arthur O'Donnell

Legislative waivers from the "nonbypassable" CTC could favor

a fortunate few, opening up competitive options even

in advance

of 1998.With a fountain pen and a flourish of promises, California Gov.

Commission Shelters Utility QF Capacity Payments

Phillip S. Cross

The Massachusetts Department of Public Utilities (DPU) has again turned down a request by a cogeneration developer (QF) to collect capacity payments for the entire 20-year term of a purchased-power contract with Commonwealth Electric (CE), despite conflicting advice from the state supreme court.

Last year, in remanding a similar DPU ruling, the Massachusetts Supreme Court had suggested that a contract price violates the Public Utility Regulatory Policies Act (PURPA) if it does not include any capacity payments for most of its term.

Something for Everyone: The Politics of California's New Law on Electric Restructuring

Dan Richard and Melissa Lavinson

Early on in the debate, the legislature had signaled the commission that it would need the blessing of lawmakers to pursue its agenda.This past August, during the waning days of a two-year session, the California Legislature unanimously passed a landmark bill to deregulate the state's $23-billion electric utility industry.

The new law, known as "Assembly Bill (AB) 1890, largely reaffirms the broad outlines of the December 1995 Final Policy Decision issued b

California Prevails

Phillip S. Cross

The U.S.

Stranded Cost Recovery: All FERC'ed Up

Michael T. Maloney, Robert E. McCormick, and Chad A. McGowan

Stranded-

Cost

Recovery: All FERC'ed Up

By Michael T. Maloney, Robert E.

McCormick, and Chad A. McGowan

The "lost-revenues" approach in Order 888 ignores the fact that cash flow drives

asset valuation . . .

. . . the key to measuring uneconomic investment.

Industrial Customer Can Choose Subtransmission

Phillip S. Cross

The Maine Public Utilities Commission (PUC) has ruled that Central Maine Power Co. acted in a discriminatory manner when it refused to grant a request by a large industrial customer, Yorketowne Paper Mills of Maine, to rate classes to time-of-use subtransmission.

The case was notable since the customer's employees had filed a complaint alleging improper denial of service and seeking reparation for overcharges. See, Yorketowne Paper Mills of Maine, et al. v. Central Maine Power Co., 170 PUR4th 535 (Me.P.U.C.1996).

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