[BETA] Fortnightly

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. R- 00973877.)

But PECO called the recommendation proof of a "fundamental misunderstanding" of the Electric Competition Act, which was signed into law by Gov. Tom Ridge on Dec. 3, 1996. The utility said the ALJ's ruling applied a standard of review of "minimally controversial," that is not set forth in the act, which effectively gives opposing parties veto power over securitization requests. In its exceptions, PECO said "a mere claim of controversy should not be sufficient to frustrate the act and foreclose the use of the securitization process in this case."

PECO has said that if its securitization request is approved, then it would reduce electric rates by $111 million, or 3.4 percent annually. According to the utility, while the ALJ may regard the filing as offering "meager" customer benefits, PECO does not believe a rate cut of $1.1 billion over the next 10 years is insignificant or trivial.

Meanwhile, in "white paper"posted on the Internet on May 5, IPALCO Enterprises Inc., singled out the PECO proposal as a "swindle." IPALCO acknowledged that PECO customers would see a cut in carrying charges through refinancing, but claimed they would forgo substantial rate reductions through the securitization plan.

"PECO collects rates that allow it to obtain an investment return on $9.7 billion of total ... investment," noted IPALCO. "Since PECO claims that Philadelphia can be just as well lit with assets worth $2.6 billion, it is obvious that rates could fall dramatically ... if PECO's territory were opened up to competition."

Articles found on this page are available to Internet subscribers only. For more information about obtaining a username and password, please call our Customer Service Department at 1-800-368-5001.