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Fortnightly Magazine - January 15 1997

NRC Sets Up Nuclear Waste Internet Site

Lori A. Burkhart

The Nuclear Regulatory Commission (NRC) has launched a discussion site on the internet as a first step towards updating plans for the "Licensing Support System," an electronic information management program to be used in the eventual licensing of a high-level radioactive waste repository.

The program, known as "LSSNet," may be reached at its internet address: http://lssnet.llnl.gov. It will continue through May 20, 1997. The internet dialogue is not intended to replace formal comments on any proposed rule that may be developed to update the licensing support system. t

Lori A.

Financial News

John L. Domagalski, Agustin J. Ros, and Philip R. O'Connor

Which matters most: Cost? Price? Sales? Regulation?

Many investors no longer think of electric utility stocks primarily as dividend-rich, income-oriented investments. Instead, they have begun to consider new criteria in evaluating utility stocks (em criteria that might help explain some of the variations in equity price performance now seen among various utility companies.

Mitigating Transition Costs: The Utility's Role

Lester W. Baxter, Stanton Hadley, and Eric Hirst

How a sample electric company could reduce risk of loss by upgrading performance to industry benchmarks. Competition in electric generation will expose utility costs that exceed those of alternative suppliers. Roughly speaking, these above-market ("transition") costs should track the difference between the new market price and the embedded cost set by traditional cost-of-service regulation.

The problem has attracted no shortage of proposals.

In Brief...

Sound bites from state and federal regulators.

Natural Gas Briefs

Gas Rate Indexing. Alabama continues its a rate stabilization and equalization (RSE) procedure for Alabama Gas Corp. (rates adjusted quarterly to conform return on equity to a preset range). Commission says RSE plan has helped company address recent gas market changes such as supply diversification, system bypass, and competition. Docket No. 25600, Oct. 7, 1996 (Ala.P.S.C.).

Gas Motor Vehicles. Peoples Natural Gas Co.

Recovering Stranded Costs: Not "If," But "How"

Ruth K. Kretschmer, and Robert Garcia

Illinois has yet to face the issue, but when it does, it may find the road blocked by jurisdictional rules at the FERC. According to estimates by Moody's Investor Service, the state of Illinois would face stranded costs of nearly $6 billion if it should mandate retail wheeling to allow the state's electric utility customers to choose their own supply of electricity.

Gas LDC Must Answer Antitrust Suit by Marketer

Phillip S. Cross

By reversing a ruling by a federal district court judge, the United States Court of Appeals for the Ninth Circuit has effectively reinstated an antitrust suit by a natural gas marketer against Washington Natural Gas Co., a natural gas local distribution company (LDC), charging the LDC with "off-tariff" pricing and other practices designed to favor commodity sales over transport-only customers who buy their own gas directly, such as from marketers.

In reinstating the complaint, the appeals court denied any "state action immunity" against antitrust claims.

How Technology Firms See Pay-As-You-Go Billing

Bruce W. Radford

More than just software, prepaid billing remakes the business.

It revamps operations and changes the customer relationship.

There are no technical impediments that stand in the way for prepayment meters in North America. Whatever roadblocks do exist lie more with the state legislatures and with the culture of gas utilities and consumers."

Those comments come from Janet Penz, product manager (diaphragm meters) for Schlumberger Industries, speaking from her new Canadian office in Mississaugua, Ontario.

PSC Disdains "Gradual" Reform in Consumers Power Settlement

Phillip S. Cross

The Michigan Public Service Commission (PSC) has approved a comprehensive settlement in a series of closely watched cases in which Consumers Power Co. had proposed to realign electric rates and cost recovery to anticipate retail competition in electricity.

Among other points, the settlement allows Consumers Power to implement a "direct access" tariff to meet anticipated competition for its largest customers.

Frontlines

Bruce W. Radford

On Monday, January 6, the Board of Trustees of the North American Electric Reliability Council (NERC) voted unanimously to require mandatory compliance from its regional and affiliate councils with all reliability "policies" adopted by NERC. Previously, the regional councils (MAPP, ERCOT, ECAR, etc.) were only required to give their "best efforts" to comply.

As the board explains, "Compliance with NERC rules needs to be insured, but peer pressure will not be sufficient."

This new vote stems from "A Call to Action," mailed out on October 28 by Richard J.

Vermont Issues Electric Restructuring Plan

Phillip S. Cross

Despite an acknowledged drop in rates (down 11 percent in real terms over the last ten years) the Vermont Public Service Board has proposed to restructure the state's electric utility industry. The proposal would follow along the same lines envisioned by many other states (em i.e., competition and choice in the generation sector, with regulated monopolies for transmission and distribution services, plus recovery of "legitimate" stranded costs.

Beginning in 1998, retail customers could choose among competitive suppliers.

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