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Fortnightly Magazine - October 1 1997

A West Coast View: The Case for Flow-Based Access Fees

Cliff Rochlin, and Roger Clayton

Divide the grid by usage (em local vs. regional. Apportion costs accordingly, to energy customers by fixed charge, and power producers by flow and distance.

Traditionally, utilities have received transmission costs through an average, rolled-in access fee, or postage-stamp approach. In a deregulated environment, that approach will lead to distorted pricing.

And not just because of transmission-line congestion.

Much of the current debate over electric transmission pricing has centered on the various competing methods of congestion pricing, such as zonal vs.

Pennsylvania Electric Restructuring

Phillip S. Cross

The Pennsylvania Public Utility Commission has ended the summer with a series of rulings to guide the state's electric utilities as they devise individual restructuring plans. Overall, the rules seek to temper the effect of competition on certain consumer safeguards and social benefit programs.

Public Purpose Programs. Under new PUC guidelines, electric distribution companies must submit comprehensive, multi-year plans for universal service and energy conservation.

They Don't Need Coaching

Margaret A. Welsh

I sincerely appreciate your covering NARUC and its outlook in the July 15, 1997, issue of PUBLIC UTILITIES FORTNIGHTLY (p. 26). I believe your summarization of my conversation with your Associate Editor and his depiction of NARUC sends a clear message about the unmatched resources and capabilities our organization enjoys by virtue of its membership.

Overall, the article generally captures the essence of our conversation. Nevertheless, it missed on my characterization of the NARUC staff's intended role with respect to the revitalized Washington Action Program.

N.C. Sets Fuel Cost Proxy for Purchased Power

Phillip S. Cross

Resolving a new issue now arising under fuel cost adjustment clauses, the North Carolina Utilities Commission has ruled that electric utilities who buy wholesale power from marketers should treat 75 percent of the energy price component as a "fuel cost," in those instances where the seller cannot or will not provide actual fuel cost data.

The case involved Duke Power Co., which had purchased power from Enron for resale.

Uncooperative Cooperatives?

Terry Christenberry

Your article in the July 1, 1997 issue of PUBLIC UTILITIES FORTNIGHTLY regarding co-ops and competition was very much on target ("Co-ops and Competition: Still a United Front?" p. 16). Our firm spends a significant amount of time providing financial advice to some of the more progressive rural electric cooperatives and have had some association with a few of the organizations mentioned in your article.

We are strongly pro-cooperative. Co-ops continue to provide high-quality electric, gas and other services to significant numbers of Americans, both rural and urban dwellers.

Off Peak

Sally and Kristina Sepetys

More low-cost states seen joining the move toward electric restructuring.

Six months ago, those states with the highest electric prices appeared the furthest along on the path to electric industry restructuring. That is no longer the case.

Today, even those states that can boast of lower-than-average rates are exploring avenues toward more competition, as shown below. The table groups states into five tiers, by the level of activity to date. These activities include initiatives by legislatures, regulatory commissions, utilities and other parties.

The Rewards of Reliability

Gregory S. Vassell

As one of the early voices in the "reliability debate," urging all of us not to lose sight of the importance of reliability of electric bulk power supply (see, for example, my article in the Oct. 11, 1990, issue of PUBLIC UTILITIES FORTNIGHTLY, on the occasion of the 25th Anniversary of the Northeast Blackout of 1965), I applaud the FORTNIGHTLY for sponsoring a forum on "Reliability, Transmission and Competition" in its June 1, 1997 issue (p. 45). By doing so, your magazine has provided an important public service.

Frontlines

Bruce W. Radford

I've been learning about venture capital funds for electric utilities. The lesson has run the gamut: from competition to cannibalization; from portfolios to the laws of thermodynamics; from the next new thing to the renaissance of a 19th-century technology.

Some might ask: Isn't venture capital just like gambling? Not so, say execs from two utilities now getting their feet wet in a venture fund. All the same, this story will take us to Atlantic City casinos before it's done.

People

Aquila Energy, a subsidiary of UtiliCorp United, has hired David H. Stevenson former marketing v.p. of Duke/Louis Dreyfus, as v.p. power marketing for its mid-continent and western regions.

Charles Falcone, who retired as American Electric Power's system power markets senior v.p., was named project managing director of the New York State Power Pool's Independent System Operator. Falcone served as an official with the U.S. Department of Energy for several years before joining AEP.

Ohio Electric Utility Institute has elected William J. Grealis as board chair and president.

Joules

The Northwest Power Planning Council is accepting comments on a revision of its Fourth Northwest Power Plan through Oct. 31. The plan is the latest created by the council since 1983. It reviews industry developments in generation, conservation, gas and electric. It also examines institutions created in response to increasing competition and policy evolution. The draft reflects recommendations of the Comprehensive Review of the Northwest Energy System and suggests ways to carry out many of those recommendations. For a copy (Document 97-11), call (800) 222-3355.

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