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Fortnightly Magazine - October 15 1997

New York Utilities Ask for Market-Based Rates

Lori A. Burkhart

Six out of eight members of the New York Power Pool have asked the Federal Energy Regulatory Commission to approve a request to provide electricity, installed capacity and ancillary services at market-based rates in the state's restructured market.

Included in the Aug. 15 filing are market power analyses for individual members and a plan for monitoring the proposed New York ISO. According to the utilities, the analyses demonstrate that the market under the proposed industry structure will be workably competitive. They also support the market-based rate proposal.

Pipeline Restructuring: Slicing a Shrinking Pie

Bruce W. Radford

THE FERC TAKES SUGGESTIONS ON THE FUTURE OF THE GAS INDUSTRY.

Earlier this year, the Federal Energy Regulatory Commission opened a discussion of issues facing the natural gas industry. Its aim? To set "regulatory goals and priorities" for the era following from Order 636, issued in 1992. %n1%n

To gather input, the FERC scheduled a two-day public conference. It asked for comments on a myriad of topics, ranging from cost-of-service rates to hourly gas pricing and services.

Foreign Utility Investments are Questioned

Lori A. Burkhart

Campaign for a Prosperous Georgia has asked the United States Court of Appeals for the Eleventh Circuit to reconsider and vacate orders by the Securities and Exchange Commission allowing Southern Co. to move forward with investments in foreign companies.

CPG claims that the SEC should have denied the utility's request to acquire foreign utilities using financing and guarantees of more than 50 percent of retained earnings. The company claimed that such acquisitions violate "safe harbor" limits. The filing points to the recent agreement by Southern Co.

Investor-Owned Utilities: Adjusting the Focus

Kent Knutson

Throughout the 1990s, investor-owned utilities have redefined the way they do business to position themselves for competition better. The downside of these efforts is higher rates for small customers and employee layoffs.

Today, IOUs are more focused on improved efficiency. IOUs are concentrating on keeping large customers, investing less in their utility systems and retiring debt.

Though IOUs continue to dominate electric generation nationwide (74 percent), electric output has increased by only 8.1 percent since 1990.

Perspective

Edward L. Flippen

With benefits unclear, PUCs will "go slow."

California, New Hampshire, Massachusetts, Nevada, Pennsylvania, Rhode Island, and Vermont have given customers the right to choose their electric providers.

Other states are considering similar legislation.

In Congress, U.S. representatives Schaefer (R-Colo.), Markey (D-Mass.), DeLay (R-Tex.), and U.S. Sen. Bumpers (D-Ark.) and others have slapped bills on the table that would give choice to electric customers on a national scale.

Frontlines

Bruce W. Radford

Let me tell a story. A consultant I know works as the lead negotiator for a Native American tribe that sells fuel to electric generating plants. On occasion he visits the reservation to discuss business plans with the tribe, exploring various scenarios for utility restructuring.

Recently, this consultant said he found himself in the ceremonial council lodge, instructing tribal leaders on decision trees and discounted cash flows. When he finished, the younger members conferred briefly in their native language.

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.

People

The board of the California ISO selected Jeffrey D. Tranen as its first CEO. Tranen is former president of the New England Power Co., senior v.p. of the New England Electric System and chair of NEPOOL. The ISO starts operation Jan. 1, 1998.

Charles F. Gay, Ph.D., former director of the DOE's National Renewable Energy Laboratory, was hired as president and CEO of ASE Americas Inc. Klaus Albrecht, former president and CEO, will serve on ASE's board and as senior v.p.-business development.

In Brief...

Sound bites from state and federal regulators.

Area Code Overlays. Colorado adopts overlay plan to ease telephone-number shortage in Denver area, and will introduce a single new area code over the area served by 303 code. PUC says the approved plan meets FCC requirements to ensure new area codes do not disadvantage new providers. Docket No. 97A-103T, July 29, 1997 (Colo.P.U.C.).

Water Main Extensions. Interpreting a recent policy statement, state regulators approve proposal by Pennsylvania-America Water Co.

Joules

A $35 million, 45-mile Texas-to-Mexico natural gas pipeline is set to be ready by mid-December. With a capacity of 212 MMBtu/d, the 24-inch diameter pipeline will supply the 700-megawatt Samalayuca I and II power plants, set partially to open in 1998. El Paso Natural Gas Co. and El Paso International Co. are partnered with Pemex Gas Y Petroquimica Basica in the 50-50 joint venture.

El Paso International also has signed a joint development pact with Furnas Centrais Eletricas S.A., BHP of Brazil Energy, Centrais Electricas Brasileiras S.A., and British Gas of Brazil.

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