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Fortnightly Magazine - January 1 1997

Nuclear Power: Ask a Contrarian

William H. Timbers,Jr.

No one needs to tell the readers of PUBLIC UTILITIES FORTNIGHTLY about the technical, economic, regulatory, and institutional obstacle course facing the nuclear power industry. All you need do is look around to see an industry struggling to live up to expectations. Some would term the nuclear outlook "grim:"

• No economic incentives to build new nuclear plants.

• No new plant orders in the United States (a modest complement of foreign orders)

• Precious few attempts to renew operating licenses; even fewer succeed.

Financial News

J. Michael Parish, Richard S. Green and Stephen H. Kinney

Targeted Debt: Give the Stockholders What They Want

Too much leverage can be risky, but sometimes it's just what the doctor ordered.

One of the reasons that stockholders in Columbia Gas survived a Chapter XI proceeding more nearly intact than owners of other bankrupt utility enterprises was that the parent holding company was a secured creditor of its operating subsidiaries at the time of the filing.

Special Report

Joseph F. Schuler, Jr.

Talk runs gamut from "rocket docket" to "Just go slow." A merger announcement kickstarted NARUC's annual conference last year. This year, in San Francisco, there was little difference in conference chatter. Only this time, MCI Communications Corp. and British Telecommunications Plc were the suitors, in a $20 billion corporate marriage.

Regulators had better get used to the "M" word, noted speaker John E. Hayes, Jr., chairman of Western Resources Corp.

In Brief...

Sound bites from state and federal regulators.

Natural Gas Briefs

Gas Motor Vehicles. Federal appeals court revokes antitrust immunity in suit by California CNG, Inc., alleging that Southern California Gas sought to dominate gas vehicle (NGV) refueling market by offering "free or virtually free" installation and maintenance of refueling facilities for NGV fleet operators. No. 95-55806, Sept. 19, 1996, 96 F.3d 1193 (9th Cir.).

Interdepartmental Transfers.

Commission Examines LDC Plan to Slash Industrial Rates

Phillip S. Cross

The West Virginia Public Service Commission (PSC) has criticized a request by Shenandoah Gas Co. to require its residential and commercial customers to pay the lion's share of a newly approved rate increase, citing the utility's cost studies as "flawed" and its cost allocations as having compounded the error.

The company had argued that its cost studies showed that interruptible customers were already generating a 45 percent rate of return, while rates for its firm customers produced a negative return on the investment necessary to serve them.

Courts Affirms Benefits Ruling

Phillip S. Cross

The Pennsylvania Commonwealth Court has upheld a ruling by the state Public Utility Commission (PUC) permitting Equitable Gas Co., a natural gas local distribution company (LDC), to recover costs associated with a switch from pay-as-you-go to accrual accounting for post-retirement benefits other than pensions (PBOPs) under Statement of Financial Accounting Standards 106.

The state's Office of Consumer Advocate had appealed the decision, claiming that in approving a nounanimous settlement the PUC had failed to determine whether the utility needed the cost recovery to achieve a fair ra

Ratepayers Fund Losses, Write-offs, but Not Catastrophes

Phillip S. Cross

In two recent rulings, the New York Public Service Commission (PSC) has authorized electric utilities to call upon ratepayers to help cover losses from rate discounts and write off sunk investment in nuclear power plants. Ratepayer contributions in each case will come through incentive clauses by which revenues or losses are shared on an 80-20 basis between customers and company stockholders.

Rate Discounts. In one case, the PSC allowed Niagara Mohawk Power Corp.

Residential Pilot Programs: Who's Doing, Who's Dealing?

Joseph F. Schuler, Jr.

Residential Pilot Programs:

Doing,

Dealing?

Customer choice and electric restructuring may appear synonymous to regulators, but for utilities "choice" means "market share."

THERE WERE 19 PILOT PROGRAMS

planned or underway in the United States by the end of November, involving some 500,000 customers in all classes. The goal? To test competition in retail electric markets.

In the residential class, pilots were operating in Illinois, New Hampshire, and New York. Massachusetts expected to roll out its pilot by January 1. Pennsylvania was planning an April startup.

Off Peak

Options, that is, as they pass the nationwide median in long-term pay incentives (em more than their counterparts at transportation or industrial firms (em but still less than execs at automotive and consumer companies.

Among CEOs (chief executive officers) at consumer products companies, industrial concerns, and transportation firms, top executives at energy companies can now boast of long-term pay incentives accounting for some 44 percent of their overall annual pay packages.

Load Aggregation: The Wolf at the Door?

Ben Blumberg, and Jonathon Shaevitz

Load Aggregation:

The Wolf at the Door?

Of course, there's nothing to stop a utility from aggregating its own customers.

WHAT, EXACTLY, IS LOAD "AGGREGATION?" Is it a threat, an opportunity, or merely a sales tactic?

Actions taken in California, as well as in pilot programs across the country, place customer aggregation on the leading edge of efforts to pull native load from electric utilities.

Ironically, present-day utilities already "aggregate" their customers (em albeit into a single group.

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