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Fortnightly Magazine - September 15 1997

The Union Label: Electric Restructuring's Hidden Side

Joseph F. Schuler, Jr.

In union circles, they call it "burial insurance." That apt phrase denotes the severance, early retirement and re-training packages negotiated for veteran utility workers sideswiped by a changing market.

So far, labor has won some insurance: through legislation in California and in Maine; through a commission order in Massachusetts; and a pending settlement agreement in New York City, prompted by a commission order.

Labor lost hard in Pennsylvania and in Rhode Island, however. Worker protections weren't built into restructuring decisions in those states.

PUC Chair Quain Eyes Gas Competition

Lori A. Burkhart

John Quain, chair of the Pennsylvania Public Utility Commission, who helped draft legislation to introduce electric competition in his state, predicts that natural gas deregulation is next on the agenda.

In fact, the Gas Customer Choice Act was pending in the House and Senate in the Pennsylvania Legislature.

Speaking at the American Gas Association's Natural Gas Roundtable on July 16 in Washington, D.C., Quain predicted a customer choice bill would be signed either this calendar year or early in 1998.

Energy Marketing: Is There Added Value in Value Added?

Alex Henney, Jeff Percival, and Ken Simmonds

In Norway and in England and Wales, power retailers are learning hard lessons.

The U.S. electric industry has long tried to follow Thomas Edison's dictum "to sell light instead of current" (em to get beyond the meter. But what is beyond the meter at industrial and commercial sites?

In energy-intensive industries one sees processes such as smelters, pulp mills, rolling mills, refineries and chemical plants. In general manufacturing, although some electricity is used for specialized electrotechnologies, most is used for lighting, motive power, computing and robotics.

FERC's Massey Previews Fall Electric Agenda

Lori A. Burkhart

Commissioner William L. Massey said four issues would dominate the fall electric agenda of the Federal Energy Regulatory Commission: Orders 888 and 889 implementation, mergers, independent system operators and reliability.

Speaking on Sept. 11 at the PowerMart Power '97 conference and expo in Houston, Massey said the FERC hoped to issue a major order this fall on elements of California restructuring to ease implementation of the ISO and power exchange by Jan. 1, 1998.

What's a Power Plant Worth

Jeffrey P. Price

"Spark spread" sets value, but as prices diverge from system

lambda, merchant plant buyers will be flying blind.

Many power plants will be bought and sold in the next decade. Some utilities will divest power plants as required by regulators; others will sell for strategic reasons. Most of the plants sold likely will become merchant plants, with no guaranteed market for their electric output. Merchant plant activity is already significant and growing. The value of these plants will depend on how well they can perform in an uncertain market.

OASIS Problems, Solutions Brought to FERC's Attention

Lori M. Rodgers

The Federal Energy Regulatory Commission invited industry representatives to Washington, D.C., in July to talk about the electric utility industry's implementation of OASIS, or open-access, same-time information system, which is used to monitor and schedule electric transmission capacity.

It ended up with an earful about problems on the on-line system.

Gerry Cauley, of the industry's volunteer "How Working Group," said, "Overall, the OASIS does provide comparable access," and the system is seeing reservation activity at expected levels.

Far From Closure: No Consensus Yet on Accounting Proposal for Decommissioning

John S. Ferguson

In aiming to make financial statements more meaningful, will FASB instead make them indecipherable?

By mid-summer, a total of 123 companies had cranked out some 574 pages of comments, detailing exactly what they thought of the accounting rules proposed by the Financial Accounting Standards Board to cover the closure or removal of certain long-lived assets. %n1%n The FASB's"Exposure Draft," issued early last year, had requested comments on eight issues. The respondents answered as requested, but also raised a host of new questions.

FERC Delays Four-Way Combo

Phillip S. Cross

U.S. District Court in New Hampshire has denied a move by customers and ratepayer groups to intervene in litigation on electric restructuring simply on the basis that they wanted lower rates.

The court said that a general desire to pay lower rates was not specific enough to intervene in the lawsuit, which was filed by several large electric utilities to challenge elements of the plan for competition approved in February by the state Public Utilities Commission. See, Re Restructuring New Hampshire's Electric Utility Industry, Order No. 22,514, 175 PUR4th 193 (N.H.P.U.C.).

Job Protection Measures

Joseph F. Schuler, Jr.

Key points from approved and pending legislation

California:

A.B. 1890, signed into law Sept. 23, 1996.

• Plant Divestiture. To ensure the safe, reliable operation when utilities sell off generating facilities, buyers or successor corporations must keep the current staff on board for at least two years.

• Stranded Cost Recovery. Statute recognizes explicitly that transition to customer choice can produce employee hardships.

FERC Approves Two Convergence Combos

Lori A. Burkhart

The Federal Energy Regulatory Commission has approved the merger of Brooklyn Union Gas Co. and neighboring Long Island Lighting Co., although concerns emerged about potential vertical market power. A new holding company, temporarily called HoldCo, will run the merged corporation.

At the same July 16 meeting, FERC indirectly sanctioned the merger of Texas-based Valero Energy Corp. with PG&E Corp., the holding company (created Jan. 1, 1997) for California-based Pacific Gas & Electric Co.

LILCO + Brooklyn Union.

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