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Fortnightly Magazine - September 15 1997

N.Y. Fills "Vacuum" Asserts Wheeling Authority

Phillip S. Cross

The New York Public Service Commission has asserted authority to mandate direct-access pilot programs to give supply choice to energy consumers, noting that state authority is crucial to filling a regulatory "vacuum," since the Federal Power Act withholds authority from the Federal Energy Regulatory Commission to mandate retail wheeling.

The case involved a pilot program developed by Dairylea Cooperative Inc.

Georgia Proposes Gas Rags

Lori A. Burkhart

The Georgia Public Service Commission has established standards for issuing certificates to marketers to compete under the state's Natural Gas Competition and Deregulation Act.

Under the standards, candidates must show their creditworthiness. To compete, a marketer must prove that its capital base or other financial resources can withstand the business and financial risk and absorb losses that might occur in providing firm gas service to retail customers.

S.B. 215, which was signed into law in April, established a regulatory framework to deregulate the gas industry.

Gas Prices Spark Action

Phillip S. Cross

Unexpected price increases for natural gas during the past winter heating season have stimulated action by state regulators across the country. Most recently, North Carolina and New Mexico have approved changes in adjustment clause and billing rules to temper the effect on consumers.

North Carolina. The North Carolina Utilities Commission opened a generic proceeding to consider shortening the notice period required for changes to benchmark natural gas commodity rates by local distribution companies.

TVA to Slash Debt, Reduce Employees

Lori A. Burkhart

The Tennessee Valley Authority has unveiled a 10-year business plan that includes a 50-percent debt reduction and a 15-percent reduction in the total cost of power by 2007.

"Our goals for 2007 are to reduce the wholesale cost of power from the current 4.11 cents per kilowatt-hour to 3.46 cents, slash TVA's debt in half to $13.8 billion and respond to changing customer needs," said TVA CFO David Smith.

The Ten Year Business Outlook recommends a price increase in 1998 (em its first in 10 years (em which should boost TVA's revenues 5.5 percent.

Ratepayers to Find Emissions Allowance Pool

Phillip S. Cross

The New York Public Service Commission has authorized Niagara Mohawk Power Corp., to set up an emissions reduction credit pool to assist economic development efforts in the state.

It also approved the utility's plan to fund the pool with more than $700,000 of existing deferred credits owed to ratepayers from previous sales of sulfur-dioxide allowances.

The company plans to sell the credits at market value and as part of special discount electric service tariff offerings.

Utilities to Settle Merger Termination Suit

Lori A. Burkhart

Central and South West Corp. has settled its pending litigation with El Paso Electric Co., resolving issues surrounding the 1993 termination of their proposed merger.

Central and South West will pay El Paso Electric $35 million, while both utilities have agreed to release all future claims against each other. In April, a bankruptcy judge ruled that Central and South West owed El Paso Electric a $25-million merger termination fee under their agreement, and said Central and South West also might owe an additional $18 million in interest.

Maine Lowers Telco Access Charges

Phillip S. Cross

Responding to directives from its Legislature, the Maine Public Utilities Commission has directed local-exchange telephone carriers to lower their per-minute, common-line charge by 20 percent, but without changing the access charge rate structure.

At the same time, it rejected a proposal by New England Telephone and Telegraph Co. to adjust the local carrier's recently approved price-cap plan to reflect a predicted erosion in revenues. The PUC found no evidence that a cut in access rates would depress local carrier revenues.

Wisconsin Combo Called a "Natural Outcome"

Lori A. Burkhart

WPS Resources Corp. and Upper Peninsula Energy Corp., which have a history of working together on power sales and emergency dispatch, are merging.

WPS Resources Corp.'s main subsidiary, Wisconsin Public Service Corp., is an electric and gas utility serving 400,000 customers. Upper Peninsula Energy Corp.'s main subsidiary, Upper Peninsula Power Co., has 48,000 electric customers.

The acquisition is structured as a stock swap valued at $71.4 million. Holders of Upper Peninsula common stock will receive 0.90 shares of WPS stock for each share held.

Duff & Phelps Credit Rating Co.

Idaho Supports DSM: Florida Retreats

Phillip S. Cross

The Idaho Public Utilities Commission has rejected a request by Intermountain Gas Co. to cut demand-side management and conservation requirements from its integrated resource planning guidelines, despite company claims that reforms were needed to align the planning process with current business practices.

Meanwhile, the Florida Public Service Commission has authorized Florida Power and Light Co. to terminate an existing research and development program for a new gas-driven technology.

Idaho.

SoCalGas Gets Performance Order

Lori A. Burkhart

Having approved a performance-based ratemaking mechanism for Southern California Gas Co., the California Public Utilities Commission is free to rule on the merger of Pacific Enterprises (parent company of SoCal Gas) and Enova Corp., which owns San Diego Gas and Electric Co.

The PBR should reduce annual revenues by $160 million. If earnings exceed the authorized 9.49-percent rate of return, then a portion will be returned to customers.

The PBR is effective for five years.

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