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

Legislative Hot Spots: From Texas to Ohio, New Jersey to Minnesota, Electric Restructuring Games Begin

Fortnightly Magazine - February 15 1997

utilities because of its separate power company, which eventually would have to be sold. The same scenario would play out at each utility.

The DPU draft rule also called for an independent system operator and a separate power exchange, replacing the New England Power Pool.

The DPUÆs final restructuring order in December was expected to include proposed legislation. Still another panel, the Special Committee for Utility Restructuring, co-chaired by Sen. John D. OÆBrien (D) of the Energy Committee, delayed its own December report until February or March.

OÆBrien calls restructuring ôthe most confusing issue in the world,ö but he believes the legislature should vote on the subject this year.

It is clear his uppermost concern is the workers who may not survive the post-monopoly market test. ôWe have to make an agreement on stranded investment that protectsùprimarily from a legislative standpointùnot the rich guys who built these plants and are waiting on their returns, but basically the human stranded investment,ö he says.

On the day he was interviewed, OÆBrien met with organized labor leaders, whose position also is clear: Just donÆt do it.

The restructuring landscape changed somewhat since New England Electric System agreed to divest its generating assets. That is one of the prime issues the attorney general was negotiating with other utilities, seeking to get them to join in with the settlement.

Although the NEES deal guarantees customersÆ savings, it is likely NEES will recoup potential losses later. But the utility must recognize, says OÆBrien, ôthat legislators who go home to their districts have to tell everybody that thereÆs a benefit for everyone.ö

He says the legislature recently passed several pro-business billsùfor manufacturers and the mutual fund industryùso the pendulum is likely to swing back.

That in mind, will stranded costs be shared?

Utilities argue that divestiture rids them of some stranded costs, so recovery should be 100 percent. OÆBrien asks if there is no stranded-cost recovery, who funds labor losses and pension fund investments?

ôFor that alone, stranded costs have to be paid,ö OÆBrien says. ôBut 100 percent? ThatÆs going to be interesting.ö

Tax loss related to devalued plants will be part of the stranded-cost package. Securitization, in which stranded-cost recovery guarantees are used as loan collaterals, was a hot topic in the committee. But constitutional issues may bar Massachusetts from using this stop-gap measure.

Public purpose, environmental and demand-side management issues, which were first addressed in this state, will be debated in legislative chambers. ItÆs likely that the low-income subsidy will be kept on as a wires charge.

Maine:

Democrats To Carry Dereg Bill With Broad Policy Consensus

Democrats take control of the Maine legislature this year, but politics are unlikely to influence the electric restructuring debate destined for each chamberÆs floor.

A Public Utilities Commission attorney, a legislative counselor and a ranking Democratic state senator on the energy committee say there will be less partisanship, still more policy agreement and some polemic on key issues.

Restructuring legislation is targeted by party leaders, and the governor, as a major undertaking of the session. Legislators expect to be lobbied