Frontlines
More than a decade ago, working at the energy laboratory at the Massachusetts Institute of Technology, the late Fred Schweppe devised a novel scheme for pricing electric transmission. His solution? Do nothing. Simply ignore transmission.
Fortnightly Magazine - June 1 1997
CIPSCO Merger Approved With Conditions
The Missouri Public Service Commission has approved the merger of Union Electric Co. and CIPSCO Inc., if Union Electric meets certain requirements, such as helping to form an independent system operator for the region's transmission system.
The formation of the ISO must be consistent with guidelines established by the Federal Energy Regulatory Commission. The proposed merger will include the formation of a new entity, Ameren Corp., as a federally regulated public utility holding company.
Acquisition Premium.
Byline:
Phillip S. Cross
People
Jay L. Witkin replaces Jerome Feit, who retired, as the Federal Energy Regulatory Commission's solicitor. Also at the FERC, Judith Ann Dowd will serve as an administrative law judge. Dowd joins the FERC from the National Labor Relations Board.
PacifiCorp hired John Carr as assistant v.p., global industrial sales. Carr joins PacifiCorp from Direct Services Industries, where he served as an executive director.
Melissa L. Reese was hired by CMS Marketing, Services and Trading as a natural gas trader. CMS Marketing is the energy marketing unit for CMS Energy Corp.
Electric Utilities Seek Rate Caps in Rail Merger Case
The U.S. Court of Appeals for the District of Columbia has affirmed a 1995 order by the Interstate Commerce Commission (now the Surface Transportation Board) approving the merger of two major railways serving the western U.S., despite claims by several electric utilities that the merger would result in unfair rail prices.
The appeals court rejected claims by the electric utilities that the ICC should have assigned trackage rights and imposed rate caps while approving the merger of Burlington Northern Inc. and The Atchinson, Topeka and Santa Fe Railway Co.
Byline:
Phillip S. Cross
Allegheny-Duquesne Merger Claims Billion-Dollar Savings
Allegheny Power System Inc. will merge with DQE Inc., parent company of Duquesne Light Co., to form Allegheny Energy, which will save both companies about $1 billion over the next 10 years.
The new company will have a total market capitalization of $10.6 billion: $6.2 billion in equity and $4.4 billion in net debt and preferred stock.
"Allegheny Power is a winter-peaking operation: Its low-cost, efficient operations and suburban and rural customer mix fit well with our summer-peaking operation and urban customer base," said David Marshall, President and CEO of DQE.
Byline:
Lori A. Burkhart
Washington State Approves Puget Energy Merger
The Washington Utilities and Transportation Commission has authorized the merger of Puget Sound Power & Light Co. and Washington Natural Gas Co.
The merged company will be renamed Puget Sound Energy, to operate as a combined electric and gas utility headquartered in Bellevue, Wash.
Under the settlement agreement, general rates for natural gas will remain unchanged until Jan. 1, 1999. Electric rates will be lowered between 1.9 percent and 6.3 percent, depending on customer class.
Byline:
Phillip S. Cross
Enron Bows to Oregon Rate Cuts
Enron Corp. has acquiesced to a demand from the Oregon Public Utility Commission for $141 million in rate cuts as a condition to approval of the proposed merger between Enron and Portland General Corp.
The PUC staff had informed Enron in March that it would not approve the merger, based on Enron's proposed $61-million rate cut, and said it would only accept $141 million in guaranteed cost savings and rate cuts.
The trade-off is that shareholders of Portland General will receive less for their stock than Enron originally had offered.
Byline:
Lori A. Burkhart
Pa. Sets Policy on Liability Waivers
The Pennsylvania Public Utility Commission has issued a set of guidelines for the development of "enforceable" tariffs that seek to limit a utility's liability to consumers for damages associated with the provision of utility services.
It directed the state's utilities to make sure that tariffs waiving liability are consistent with six principles:
1) Events covered lie within the commission's expertise and are subject to its ratemaking authority.
2) Limitations on liability may apply in case of interrupted service or property damage only and not personal injury.
Byline:
Phillip S. Cross
Duff & Phelps Notes Aggregator's Role in Securitization
Duff & Phelps Credit Rating Co. has released a report advising that a properly structured plan for securitization of stranded utility investment should address third-party credit risk.
Byline:
Lori A. Burkhart
Off Peak
Can utilities learn to deliver?
Selling electricity is not like selling a pair of sneakers. Electricity is a product consumers can neither see, feel nor smell. Try it on? Go for a test drive? Not hardly. So how does an electric utility make its product appealing to consumers?
Some say it all comes down to price. A penny saved is a penny earned. But what about tenths of a penny? Do consumers know or even care what they pay for a kilowatt-hour? Just keeping the lights on seems enough for most.
Anticipating the opening of the retail electricity market, MidAmerican Energy Co.