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

Fortnightly Magazine - February 15 1997

4Êpercent. The report suggests no solution to make up the revenue.

• Improving utility efficiency and reducing costs through alternative rate regulation, providing performance targets and cost caps ùamong other measures.

• Redefining policy on energy conservation, environment and low-income programs. Obligations would continue under the retail market. Programs would be funded through non-bypassable systems charge.

End-user, business and environmental groups have called for retail competition by July 1, 1998, and include divestiture, trying to reverse the stateÆs go-slow approach. But NUÆs influence with the legislature, and its special contracts with large industrial customers, will weigh against these groups. NU has said it would consider a pilot open-access plan after 2000ùonce stranded costs are recovered.

The state of nuclear affairs in Connecticut could be another dampener to the debate; MillstoneÆs three units are down and Connecticut Yankee will shut down this year.

Then again, politics and persuasion could prevail.

Three years ago, Fonfara tried to start a restructuring task force but couldnÆt convince senate leaders to consider authorizing legislation. At the time, the chairmen of UI and NU told the official: ôWell, we donÆt know where this industryÆs going. We think itÆs a little premature to suggest that competition is a given.ö UI now is saying, letÆs go, letÆs go, Fonfara observes. ôIÆm saying æwait a minute.Æ

ôIÆm meeting with the chairman tomorrow. IÆm going to tell him heÆs ahead of me.ö

Illinois:

Despite Neutral Dereg Report, Final Legislation Predicted

ôItÆs our goal to pass legislation to deregulate the industry in Illinois. This year, this session.ö

ThatÆs a quote from state Sen. William F. Mahar (R), made after 18 months of hearings on electric industry regulatory reformùhearings he co-chaired. The deliberations resulted in little consensus, a neutral report and legislative proposals from three groups.

Those weighing in were the Citizens Utility Board, low-cost utility Central Illinois Light Co., and the Illinois Coalition for Responsible Electricity Choice. The ICRECÆs high-cost producers include Commonwealth Edison, and organizations like the ManufacturersÆ Association and the Retail Merchants Association.

Mahar, who introduced the legislation forming the Joint Committee on Electric Utility Regulatory Reform, says none of the restructuring proposals will become law, but he thinks the proposals will lead to compromise.

Com Ed, historically the utility that moves slowest on restructuring issues, attended the Joint Committee hearings. ôThey know that weÆre going to move on this and they know they canÆt drag their feet,ö says Mahar. ôTheyÆve changed their philosophy 180Êdegrees.ö

The legislature meets through May. ôYouÆre on board or not,ö the senator says.

The positions fall along predictable lines.

CUB calls for immediate benefits for all consumers; the breakup of monopolies to insure the cheapest power; no bailouts for bad utility investments; and guaranteed safe, reliable and environmentally sound electric.

CILCO calls for unbundled rates; a cap on electric base rates and fuel-adjustment charges for five years; ôlost-margin chargesö to ensure financial viability; a universal service fund for low-income customers; and an electric revenue-use tax to make sure the Illinois tax structure doesnÆt hurt utilities during competition.

It was in CILCOÆs territory that Illinois became the first state