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Fortnightly Magazine - March 15 1997

People

Former Sen. Alan K. Simpson (R-Wyo.) has joined the PacifiCorp board of directors. Simpson retired from the Senate earlier this year after serving three terms. Also at PacifiCorp, Dennis Steinberg, a senior v.p., was named head of global energy sales, marketing and trading. John Bohling, another senior v.p., will direct customer service, among other activities. Mike Henderson will head a new group for international business, technology and planning.

John M. Deutch has returned as a member of the CMS Energy Corp. Board of Directors. Deutch served on the board from 1986 to 1993.

Schaefer Reintroduces Restructuring Bill

Lori A. Burkhart

House Energy and Power Subcommittee Chairman Rep. Dan Schaefer (R-Colo.), recently reintroduced his comprehensive electric restructuring bill, which largely mirrors legislation Schaefer had introduced in the 104th Congress.

The new bill, "Electric Consumers' Power to Choose Act of 1997" (H.R. 655), was presented Feb. 10 and differs from the original only in that it would not preempt the state restructurings already taking place.

Trends

Christopher Seiple

As the U.S. Congress works to pass federal legislation introducing competition into the electric utility industry, one of the most divisive issues regulators and policymakers must grapple with is that of stranded cost. In a recent study completed by Resource Data International, we have found that an important issue will be how "negative" stranded costs are handled.

At the heart of our study is a detailed, plant-by-plant, analysis of stranded costs for every utility in the country. We estimate that the total above-market stranded cost nationally is $202 billion.

FERC To Address Market Power, Must-Run Plants

Lori A. Burkhart

California's three largest investor-owned utilities have petitioned the Federal Energy Regulatory Commission to convene a technical workshop on market-power issues raised by electric deregulation. Although a workshop had been held on Jan. 17, the utilities say the need more guidance (Docket No. ER96-1663-000).

The utilities are most concerned with the issue of "must-run" plants, and how to minimize the market power of generating units that must run to maintain reliability.

Joules

XENERGY Inc. and the Electric Power-Research Institute will team up in a second phase of a retail-wheeling pilot program study. The expanded study will include California, Massachusetts, Illinois and New York. Competitors, market share and sales strategies will be assessed. XENERGY first started the survey in July 1996. More than 40 utilities sponsored the research. The first phase focused mostly on New Hampshire, but also targeted electricity deregulation in the 50 states. Phase two, focusing on commercial-industrial customers, ends June 1997.

Congressmen Working To Eliminate Federal Payments to TVA By Restructuring

Lori A. Burkhart

Responding to a call by Tennessee Valley Authority's Chairman Craven Crowell to eliminate the $106-million, annual appropriation provided to it, Representatives Bob Franks (R-NJ.) and Marty Meehan (D-Mass.) on Feb. 5 introduced a bill to end that federal payment.

The congressmen, who also co-chair of the Northeast-Midwest Congressional Coalition, distributed a study outlining the $1.2 billion in annual indirect taxpayer subsidies provided to TVA.

Western Resources Wins Fight for KCPL

Lori A. Burkhart

After months of trying, which included the derailment by Western Resources of the proposed merger of UtiliCorp United and Kansas City Power & Light Co., the boards of directors of Western Resources and Kansas City P&L have approved a merger of the two companies in a stock-for-stock transaction valued at $2 billion. If approved by the necessary regulatory authorities, the new company would have $9.5 billion in assets, $3 billion in annual revenues and more than 8,000 MW of electric generation.

In Brief...

Sound bites from state and federal regulators. Gas Load Building. Finding no protest from electric utilities, North Carolina waives requirements for preliminary cost-benefit analysis and approves incentive programs for Piedmont Natural Gas Co. Inc., designed to boots gas load by installing commercial gas cooking equipment at community colleges for use in culinary degree programs. Commission tells company to conduct a cost-effectiveness analysis as soon as it can gather the necessary data from actual operating experience. Docket No. G-9, Sub 377, Jan. 31, 1997 (N.C.U.C.).

Carolinas Move Toward Restructuring

Lori A. Burkhart

North Carolina and South Carolina, both relatively low-cost power states, recently have made moves toward competition. In North Carolina, bills calling for the formation of a study commission to examine the introduction of electric supplier choice in that state were introduced in the House (H.B. 12) and Senate (S.B. 38). The intent to introduce choice has prompted the North Carolina Coalition for Customer Choice in Electricity to call on legislators to develop a report by April 1998, in time for a bill to be considered by the General Assembly that same year.

LDC Fails in Bid To Recover Coal Tar Cleanup Costs

Phillip S. Cross

The Indiana Court of Appeals has upheld a ruling by state regulators denying permission to Indiana Gas Co. to recover costs associated with the cleanup of environmental contamination at former gas manufacturing sites.

The court could find no direct connection between coal tar cleanup and the current provision of gas distribution service, which it described as a necessary condition for cost recovery, even if the property is currently in use by the utility.

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