[BETA] Fortnightly

The City of Alma, Mich., has asked the Federal Energy Regulatory Commission to consider whether Consumers Energy is entitled to recover stranded costs from customers in the municipality that switches from CE's system to a municipal electric system if the city creates one.

A consultant hired by Alma already has determined the city could own and operate a municipal utility, which would result in cost savings in excess of 20 percent. The savings estimate has been challenged by CE, formerly Consumers Power Co., because the analysis does not contain a stranded-cost payment.

The utility claims Alma would owe $56.1 million to CE if the municipal utility was created. Alma believes CE is not entitled to any stranded-cost recovery because of CE's "capacity-deficient status," coupled with the structure of the proposed utility, which Alma says would compete with, rather than displace, CE. (em LB t

Joseph F. Schuler, Jr. is associate editor, of PUBLIC UTILITIES FORTNIGHTLY. News items reported by Lori A. Burkhart, an associate legal editor of PUF.

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