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Restructuring Backlash Hammers States
Electric restructuring at the state and federal levels is moving forward fast (em too fast for some. Utilities, unions, consumers and even legislators are making their opposition known by filing lawsuits to block or slow down various restructuring initiatives, from New England to Dixie to the Desert Southwest.
Rolling Back Legislation
Pennsylvania and New Hampshire already have enacted legislation to guarantee customer choice in retail electric markets. Even so, some parties are asking for a rollback. Then there is the case of Alabama, which has not yet passed a law to guarantee customer choice, but has enacted legislation that some say imparts a chilling effect on customers who would seek alternative energy suppliers.
Pennsylvania. Pennsylvania Sen. Vincent Fumo (D) and consumer groups in March filed a lawsuit in state court challenging the constitutionality of the fast-track method used to push through the Pennsylvania bill opening the electric industry to competition.
Since the 84 pages of electric competition language were tacked onto a two-page bill regulating taxicabs, plaintiffs believe it violated a rule requiring the main bill to have a similar subject matter to the added-on language. Plaintiffs hope to have the electric competition bill struck down so they can craft a new one.
New Hampshire. Also in March, Northeast Utilities and three of its subsidiaries, Public Service Company of New Hampshire, North Atlantic Energy Corp., and Northeast Utilities Service Co., filed a lawsuit in U.S. District Court in Concord, N.H., against the New Hampshire PUC and its restructuring rules (see "Courts and Commission," PUBLIC UTILITIES FORTNIGHTLY, 4/15/97). The most immediate objection is over the parts of the order that will trigger a change in accounting rules governing financial statements for PSNH and Northeast Utilities.
The Public Service Company of New Hampshire's auditors have concluded that by basing rates on market prices rather than on PSNH's costs, the utility could no longer use regulatory accounting, and would have to write-off more than $400 million of assets, which could result in bankruptcy. Recent financial statements for the two subsidiaries contain statements of "substantial doubt" regarding their ability to continue because of the PUC's restructuring order.
Massachusetts. A group of unions has filed an appeal of the Massachusetts "Consumers First" electric restructuring settlement as it applies to Massachusetts Electric Co. The appeal was filed in the Supreme Judicial Court of Massachusetts by the Utility Workers Union of America AFL-CIO (UWUA), the Massachusetts Alliance of Utility Unions, and Local 464 of the UWUA.
The Massachusetts Department of Utility Control approved the Consumers First plan, which would implement retail choice on Jan. 1, 1998 and guarantee a 10-percent rate cut. But according to Joanne F. Goldstein, UWUA general counsel: "There is no legislative authority for the DPU to take the action it did. The DPU is empowered to regulate, not legislate."
At the DPU hearings, the unions had argued the 10-percent rate reduction was "illusory" for residential customers and small businesses, and only large industrial and commercial users would realize significant savings. The unions are concerned the rate cuts will lower standards of service and reliability.