You've heard talk lately about the convergence of electricity and natural gas. That idea has grown as commodity markets have matured for gas and emerged for bulk power.
Portland General Electric doesn't want to sell electricity anymore.
PGE, a wholly owned subsidiary of Enron, wants to focus on the transmission and distribution of electricity and has asked the Oregon Public Utilities Commission to allow all 670,000 of its customers to choose their electric provider.
It also has proposed a new way to calculate franchise fees in an unbundled environment.
In its customer choice proposal, PGE said restructuring had triggered the need for changes in the way franchise fees are calculated. Presently, franchise fees are collected through a contract as a percentage of the utility's gross revenues, less some adjustments. The gross revenues include the fully bundled revenues from energy, transmission and distribution. But that calculation will become more complicated as electric services become unbundled. PGE therefore proposes using an "energy proxy" for their calculation.
The proposed proxy would use the New York Mercantile Exchange California-Oregon border to establish the energy component of gross revenues. PGE would use that market to develop a surrogate for the energy cost component that no longer will be part of the bundled utility rates. When combined with the remaining revenues for transmission and distribution, a "new" gross revenue number would be calculated and stated on a per kilowatt-hour basis. The utility could then include that amount in the charges to its ESP customers.
PGE argues that a significant benefit is that the proxy amount can be independently determined without disclosing confidential information. A second benefit is that all utilities within the state can use a uniform proxy.
PGE plans to seek recovery of 100 percent of its transition costs.
Articles found on this page are available to Internet subscribers only. For more information about obtaining a username and password, please call our Customer Service Department at 1-800-368-5001.