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Fortnightly Magazine - August 1997

Brownout Credit Card Cost Connecticut Utility

Lori A. Burkhart

Connecticut Attorney General Richard Blumenthal has asked the Connecticut Department of Public Utility Control to order a one-time, 25-percent credit on bills of Connecticut Light & Power customers, claiming the threat of brownouts and blackouts has reduced service quality. That translates into about $33 million in customer credits.

Blumenthal also asked that the DPU order additional credits of the greater of $10, or 15 percent, in any month with one day of brownouts or blackouts, and $15 or 20 percent, for two days of problems.

Water Infrastructure Agreement Reached

Phillip S. Cross

The Pennsylvania Public Utility Commission has entered a cooperative agreement with the state's Infrastructure Investment Authority to better coordinate efforts by both agencies to improve the viability of small water and wastewater systems across the state.

The commission said many small systems had not increased rates when needed and had become unprofitable. The systems had been unable to acquire financing to make improvements to maintain good service quality and to meet future regulatory challenges.

GPU Seeks $1 Billion in Stranded Costs

Lori A. Burkhart

GPU Energy has filed electric restructuring proposals for its subsidiaries with the Pennsylvania Public Utilities Commission, calling for stranded cost recovery through a customer charge.

The filing for subsidiaries Metropolitan Edison Co. and Pennsylvania Electric Co. estimates stranded costs of $641 million and $372 million, respectively. The utilities want to recover stranded costs through implementation of a competitive transition charge paid by all customers using GPU Energy's distribution system.

States OK Telephone Industry Consolidation

Phillip S. Cross

State regulators in New Jersey, New York and California have recently approved mergers of local exchange and long-distance telephone carriers operating within those states that are part of larger interstate and international consolidations.

NYNEX/Bell Atlantic. The New Jersey Board of Public Utilities has approved the merger of two major local-exchange carrier holding companies, NYNEX Corp. and Bell Atlantic Corp.

Michigan City Still Disputing Stranded Costs

Lori A. Burkhart

The Federal Energy Regulatory Commission has moved closer to deciding the stranded cost dispute between Consumers Energy and the city of Alma, Mich., which intends to construct its own municipal electric system.

On Sept. 10, the FERC set for hearing two stranded cost issues: (1) whether Consumers Energy has met the "reasonable expectation" standard justifying stranded cost recovery from Alma; and (2) if so, what amount the utility may recover. (See, Docket No. sc97-4-000.)

Consumers Energy wants $56.1 million in stranded cost payments from Alma.

Virginia to Examine VEPCO's Rates, Earnings

Phillip S. Cross

The Virginia State Corporation Commission has announced it will conduct a broad-based investigation into current earnings and rate structures of Virginia Electric and Power Co. in light of changes under way in the electric market. The commission's staff had found, as part of an annual earnings review, that the utility "is clearly in an overearnings position."

The staff observed that the company may have "potentially large levels of stranded costs" because of uneconomic power contracts with nonutility generators.

Moody's Predicts Greater Polarity in IPP Ratings

Lori A. Burkhart

Moody's Investors Service examines key credit considerations in the evolving independent power production industry in a new report. The report predicts greater polarity in ratings of such companies.

The Haves and the Have-Nots: Access to Capital, Diversified Portfolios says the IPP industry will become dominated by "first-tier" companies that exhibit financial flexibility needed to survive in an increasingly uncertain environment. Such companies will possess diversified assets and ability to generate cash.

Oregon Disallows Costs for Executive Compensation

Phillip S. Cross

The Oregon Public Utility Commission has directed U S WEST Communications Inc. to reduce rates by $97.4 million and to refund ratepayers an additional $102 million, after having excluded from rates some $4 million in executive bonuses and incentive pay plans for management.

The refund corrects interim rates left in effect last year when the commission had terminated an alternative rate plan, finding that service quality had dropped since 1991, and the incentive-based program had begun. See, Re U S WEST Communications, Inc., UT 80, Order No.

California Chooses Transition Charge for Recovery

Lori A. Burkhart

The California Public Utilities Commission has established guidelines for the recovery of stranded costs over four years through a competition transition charge collected from existing and future customers, including those who depart the system.

The June 11 order allows recovery from 1998 through 2002 for costs associated with generation plants, nuclear settlements and QF contracts (Docket No. R.94-04-031/I.94-04-032). Costs associated with purchased power contracts, including QF contracts in place on Dec. 21, 1995, can be collected for the duration of the contract.

Florida Utility Expands Green Pricing Program

Phillip S. Cross

The Florida Public Service Commission has authorized Florida Power and Light Co. to set up a two-year green pricing research and development project under a settlement agreement between the utility and the state Legal Environmental Assistance Foundation.

The order allows FP&L to recover from all ratepayers up to $475,000 in administrative costs associated with the experiment. The commission had approved the program as proposed by the utility in an earlier ruling, but reviewed the matter further because of a complaint by LEAF.