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Fortnightly Magazine - June 1 1997

Illinois High Court to Hear Tax Case

Lori A. Burkhart

The Illinois Supreme Court has agreed to hear an appeal filed by Ogle County tax authorities regarding the valuation of Commonwealth Edison's Byron nuclear plant for the tax years 1989-1992, and whether certain plant assets were taxable as real property or exempt as personal property.

The appeal concerns a December 1996 ruling by an Illinois appeals court that effectively changed an assessment from real to personal property.

Major Coal Study Released

Lori A. Burkhart

The National Coal Council has released the findings of a major new study on coal prepared at the request of former DOE Secretary Hazel O'Leary, which found that while the generation of electricity from coal has increased, emission of pollutants from coal has decreased.

A similar report was released in April, conducted by Mills-McCarthy & Associates, and sponsored by the Western Fuels Association, Inc., the National Mining Association, and the Center for Energy and Economic Development.

"Virtual Utility" Aims for Savings

Lori A. Burkhart

Strategic Energy Ltd. has premiered a "Virtual Utility," allowing electric consumers to shop nationwide for the best-priced power. Strategic Energy's control center will allow it to access real-time energy information and travel the grid to find available electricity.

"This is the beginning of the end of increasing electric rates for consumers nationwide," said Rick Zomnir, president of Strategic Energy Ltd.

Stranded Utilities: How Demographics, Not Management, Caused High Costs and Rates

Glenn D. Meyers, Buckner Wallingford II, and Horace J. DePodwin

And why policy on

stranded costs defies

a traditional legal or

economic analysis.

There are sound economic reasons why policymakers should allow electric utilities to recover stranded costs through a competitively neutral network access charge, or some similar fee. First, differences in the quality of utility management appear to have contributed little to differences in electricity rates among states.

Cinergy To Supply Power

Lori A. Burkhart

The Blue Ridge Power Agency has chosen Cinergy Corp. as the recommended supplier of wholesale electric power to five of its members during a seven-year period starting July 1, 1998.

Blue Ridge is a "joint action agency" that assists in making wholesale supply arrangements for eight municipal electric systems in the western part of Virginia. Cinergy replaces American Electric Power-Virginia as the power supplier, and beat out the other finalists (em AEP, Commonwealth Edison, Enron, and LG&E Power Marketing.

Stranded Investment: Utility Estimates or Investor Expectations?

Steven isser, and Robert Michaels

Ask this question: Are Investors today earning what they thought they would, back when they last had faith in regulation?

As their customers discover more competitive prices, many utilities remain saddled with the costs of uneconomic plant and power purchase contracts approved under regulation. They seek compensation for these costs, but the amount deserves a close examination.

Some utilities seek remuneration that exceeds the market value of their common stock. Such a settlement seems overly generous for investors, who will continue to own their shares after the payoff.

Nuclear Waste Debate Simmers on Capital Hill

Lori A. Burkhart

A Contentious Bill Passes Senate (em Two Votes Shy of Blocking a Veto

Recently passed by the U.S. Senate, nuclear waste bill S. 104 lies mired in quicksand, facing a promised presidential veto, not to mention attacks from senators representing those states targeted for possible waste storage sites. Disposal of waste from the nation's nuclear generating plants has turned into possibly the most contentious issue on Capitol Hill.

Sen. Frank H.

Securitization of Uneconomic Costs: Whom Does It Secure?

Kenneth Rose

Touted as a panacea for stranded costs, securitization would forever shield rates from market scrutiny.

We consumers display an amazing talent to squander the fruits of our labor on the whim of the moment. Examples might include bungee jumping, vanity license plates or pet rocks. Or just about anything you might find in a magazine stuffed in the back of an airline seat.

Now make way for electric utility restructuring, where the latest fashion calls for securitization of uneconomic costs.

FERC, Maryland PSC Approve Constellation

Lori A. Burkhart

The Federal Energy Regulatory Commission and the Maryland Public Service Commission have approved the merger of Baltimore Gas and Electric Co. and Potomac Electric Power Co. to form Constellation Energy Corp.

However, the stiff terms for approval (em including mandatory rate cuts (em have prompted the utilities to claim they might abandon the merger.

Stranded Cost Recovery: A Practical Argument for Utilities

Charles E. Bayless

A recent conversation:

"When was the demise of the regulatory bargain? What you say is true, but at some point you had to know the bargain was over."

(em A state utility commissioner

"Beats me, it doesn't seem to be over yet. The electric industry still has a duty to serve all customers, and it must charge below-market rate confiscatory for many of our services because of the regulatory bargain.

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