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Fortnightly Magazine - June 15 1997

Georgia Governor Signs Gas Law

Lori A. Burkhart

Georgia Gov. Zell Miller has signed into law the "Natural Gas Competition and Deregulation Act," which unbundles natural gas services and opens residential gas markets to competition.

Under S.B. 215, in less than three years Atlanta Gas Light Co. and its affiliates, Georgia Natural Gas and Savannah Gas Co., no longer will sell natural gas directly to end users. Instead the companies only will provide delivery service.

PECO Fights for Stranded Costs Recovery

Lori A. Burkhart

PECO Energy Co. has asked the Pennsylvania Public Utilities Commission to approve its securitization request and reject a recommendation by an administrative law judge that the PUC not allow PECO to recover stranded costs from ratepayers.

On Jan. 22, PECO asked that it be allowed under the state's new electric competition act to refinance $3.6 billion of its electric generation assets through securitization. But on April 14, Judge Louis Cocheres recommended against the proposal. (See Pa PUC Docket No.

North Carolina Oks Duke Merger

Lori A. Burkhart

The North Carolina Utilities Commission has approved the proposed $7.7-billion merger of Duke Power Co. and Houston-based PanEnergy Corp. to form Duke Energy Corp., subject to conditions designed to protect North Carolina ratepayers from potential adverse effects.

The commission said the merger must ensure that ratepayers of the new company receive no fewer benefits than ratepayers in other jurisdictions.

Perspective

Isaac D. Benkin

Corporations will need FERC approval for a merger simply because they own paper assets that qualify as utility property.

In three companion orders issued April 30, 1997, the Federal Energy Regulatory Commission tried to stake out new jurisdictional turf. It attempted to expand its jurisdiction under section 203 of the Federal Power Act to cover "convergent" mergers and reorganizations involving electric utility holding companies and power marketers.

Competitive Efficiency: A Ranking of U.S. Electric Utilities

Hossein Haeri, M. Sami Khawaja, and Matei Perussi

Do mergers and "critical mass" really make a difference? The answer, it seems, is yes.

To become more competitive, U.S. electric utilities have embarked on a quest in recent years to improve operational efficiency and factor productivity. The question is: Are utilities making progress? And, which companies have gained a competitive edge? Which have not?

Industry analysts have long argued that given the structure of the markets they serve and their cost-based, rate-setting procedures, electric utilities tend toward monopolistic behavior.

FERC Asserts Jurisdiction in Nontraditional Mergers

Lori A. Burkhart

The Federal Energy Regulatory Commission has approved three orders that together clarify the Commission's jurisdiction over corporate realignments.

The FERC found on April 30, that while it does not have jurisdiction over mergers of public utility holding companies, it does have jurisdiction over transfers of control (dispositions) of public utility facilities.

Selling Off Your Nuclear? Here's What the NRC Has in Store

George A. Avery

Too many rules can make any plant uncompetitive.

Now, more than ever, the commission must weigh

the costs when it looks at health and safety, decommissioning and antitrust impacts. Nuclear assets seem to pop to the surface wherever one looks for causes behind the current upheaval in the U.S. electric utility industry. The nuclear experience (em with its costly prudence reviews so prevalent during the 1980s (em has helped fuel a major shift in attitude.

Senior utility managers have now come to accept fundamental changes in the electric industry.

Courts, Tunnel Completion Pave the Way for Nuclear Disposal

Lori A. Burkhart

The U.S. Court of Appeals for the District of Columbia on April 30 ruled that petitions filed in the nuclear waste storage lawsuit against the Department of Energy will be treated as petitions to compel the department to comply with a July 1996 court decision ordering the DOE to store nuclear waste beginning Jan. 31, 1998.

Meanwhile, a tunnel boring machine broke through the earth's surface at Yucca Mountain, Nevada (em the proposed storage site for the spent nuclear waste (em completing a five-mile dig that went as deep as 1,400 feet beneath the crest of the mountain.

Frontlines

Bruce W. Radford

"People are starting to talk about ISOs on the gas side." So says Jerry Pfeffer, lay advisor on energy industries for Skadden, Arps, Meagher & Flom, the New York law firm well known for its work in mergers and acquisitions.

Pfeffer's comment alludes to events now unfolding in Southern California, that fount of fashion, where each round of "deregulation" only doubles the ante in billable hours. This time it's natural gas pipelines. Do they have market power too?

"It Would Not Surprise Me"

Southern California Edison Co. has now alleged that Southern California Gas Co.

Murkowski to IRS: Hands Off Tax-Exempt Bonds

Lori A. Burkhart

Senate Energy and Natural Resources Committee Chair Frank H. Murkowski (R-Alaska) has written a letter to Treasury Secretary Robert E. Rubin regarding regulation changes the Internal Revenue Service is considering, which would allow publicly owned utilities to expand use of tax-exempt bonds to compete against privately owned utilities.

Murkowski asked the IRS not to issue new regulations giving publicly owned utilities a "special competitive advantage" by allowing the companies to issue tax-exempt bonds.

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