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Courts & Commissions

Fortnightly Magazine - December 1997

wholly owned subsidiary, which is intended to create a separate legal entity whose only business is to own transition property. The assets of the special purpose entity are not available to satisfy the debts incurred by the utility. Each utility will capitalize the new entity with equity in an amount equal to approximately 0.5 percent of the principal amount of rate reduction bonds to be issued. These "securitization" transactions are intended to allow for the substitution of lower-interest, longer-term secured obligations for higher-interest, shorter-term obligations. Re Pacific Gas & Electric Co. et al., Decision 97-09-054, a97-05-006 et al., Sept. 3, 1997 (Cal.P.U.C.); Re Pacific Gas & Electric Co., Decision 97-09-055, a97-05-006 et al., Sept. 3, 1997 (Cal.P.U.C.); Re Southern California Edison Co., Decision 97-09-056, a. 97-05-018, Sept. 3, 1997 (Cal.P.U.C.); Re San Diego Gas & Electric Co., Decision 97-09-057, a97-05-022, Sept. 3, 1997 (Cal.P.U.C.).

PBR Plans

Restructuring also has affected several rate making matters not strictly related to restructuring. In one case, the commission granted, in part, a request by the state's Office of Ratepayer Advocate to suspend incentives in San Diego Gas & Electric's experimental performance-based rate mechanism. Some electric price performance rewards and penalties contained in the plan clashed with the rate freeze mandated under the restructuring law.

The utility's PBR plan included a system of shareholder rewards and penalties intended to give managers incentives to improve the company's performance as measured by rates, employee safety, system reliability and customer satisfaction. While finding that the "non-price" incentives for safety, reliability and customer satisfaction might remain useful, the commission has now ruled that the incentive tied to the utility's rates should be suspended. Re San Diego Gas & Electric Co., Decision 97-09-052, a.92-10-017, Sept. 3, 1997 (Cal.P.U.C.).

Rate Design

In another ruling, the commission required Pacific Gas & Electric to refrain from discounting any component of its current rates except its distribution charge. As part of a scheduled rate design review, the company had proposed several new tariff options to take effect before competition to discount rates to "help avoid uneconomic bypass of PG&E's transmission and distribution system." Upon review, the commission said the new rate schedules would stymie competition, because direct access service providers would not be able to offer competitive discounts. Re Pacific Gas & Electric Co., Decision 97-09-047, a.94-12-005, Sept. 3, 1997 (Cal.P.U.C.).


The Pennsylvania Public Utility Commission has rejected a bid by an electric industry union to block new generic PUC policy that could open up certain electric metering functions to competitive firms.

Nevertheless, the PUC said the union could raise its concerns again in upcoming dockets for approval of company-specific restructuring plans.

The union, the International Brotherhood of Electrical Workers, challenged a July PUC order that had stated that competitive firms might provide "nonphysical" metering services (although distribution utilities would continue to perform all physical metering functions). That order also required electric utilities to propose plans for optional single-source billing and complaint resolution by competitive energy firms, for those customers electing a competitive supplier. See, Docket No. m-00960890, July 11,