Fortnightly Magazine - January 1 1998

News Digest

MAINE YANKEE PRUDENCE. The Maine Public Utilities

Commission will investigate the prudence of Maine Yankee Atomic Power Co.'s decision to close its nuclear plant permanently.

The PUC said Oct. 22 that unrecovered investment in Maine Yankee combined with the loss in plant value could cause additional stranded assets for plant owners Central Maine Power Co., Bangor Hydro-Electric Co., and Maine Public Service Co. If imprudent action is found, the PUC said it would take steps to ensure that Maine's electric ratepayers do not bear any related costs.

Byline: 
Lori A. Burkhart
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Reliability in Flux

NERC Assessments are Fine, but DOE Task Force Gets Last Word

Go figure. Plans to shut down nuclear generation in Ontario should not affect electricity supplies this winter within the United States, despite early rumors of chaos and rising natural gas prices. However, an unexpected slowdown in coal delivery by some U.S. railroads has "seriously reduced" on-site stockpiles of coal at some generating plants in three regional reliability councils - ERCOT, SERC and SPP - particularly those dependent on coal from the Powder River Basin in Wyoming.

Byline: 

Bruce W. Radford

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Restructuring Hearings: Much Work Is Left Congress Lacks Consensus; Administration Offers No Input

AT HIS 21ST HEARING ON FEDERAL ELECTRIC Restructuring, Rep. Dan Schaefer (R-Colo.), chairman of the House Subcommittee on Energy and Power, said the two-day proceedings were the "beginning" of developing consensus on legislation.

Fellow subcommittee members spoke out on competitive issues at the Oct. 21 hearing, which highlighted their lack of consensus. The Clinton Administration was represented by the Department of Energy's Deputy Secretary, Elizabeth Moler, who said nothing about its restructuring plans.

Byline: 
Lori A. Burkhart
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Off Peak

WHO HAD THE BEST ANNUAL REPORT COVER in the utility industry in 1997? It's a tough choice. Several covers emerged from the masses of standard-issue, black-type-on-white (or off-white) backgrounds. Which leads us to Public Utilities Fortnightly's first annual report cover "award" for the best of in a variety of untraditional categories.


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Unbundling: An Excuse for Cost Shifting?

The article "Risk and Rates for the Regulated Distribution," by Maloney, McCormick, and Tyler (Sept. 1, 1997, p. 26) was interesting. For people with the vested interests of the authors, unbundling offers the golden opportunity of reducing regulated rates without actually having a formal rate decrease. That comes about by shifting on paper as much revenue as possible from the regulated disco to the competitive genco, while of course leaving all the costs with which that revenue is associated within the disco.

Byline: 
Jim Lundrigan
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Unbundling, Take Two: No Effect on Risk

Robert Rosenberg in his comment on our paper makes a fundamental error regarding financial risk. (Rosenberg, "Unbundling Capital Costs: It Doesn't Add Up," Nov. 1, 1997, p. 46, responding to Maloney, McCormick, and Tyler, "The Wires Charge: Risk and Rates for the Regulated Distributor," Sept. 1, 1997, p. 26.)

Rosenberg claims that as utilities spin off into separate wires and generating businesses, risk will increase in both lines of business.

Byline: 
Michael T. Maloney
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Retail Choice: A Race to the Bottom

A recent article laments the slow pace of retail competition for residential gas sales in New York ("Blue Flame Blues: Gas Pilots Sputter at Burnertip," Oct. 1, 1997, p. 22). Besides the meager financial incentive for a New York residential customer to switch gas companies, there is another factor contributing to the slow headway being made by gas marketers: The New York Public Service Commission failed to establish a level playing field with just and reasonable terms of sale.

Byline: 
Gerald A. Norlander
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ISOs: A Grid-by-Grid Comparison

BY THE START OF 1998, FOUR INDEPENDENT SYSTEM operators already were in operation and conditionally approved: ISO-NE, PJM and California by the FERC and Texas by the state PUC. Three more were either pending before the Federal Energy Regulatory Commission or expected to be filed in the coming months (New York, Midwest and IndeGO in the Northwest). Three additional efforts to develop ISO proposals were under way (DesertSTAR, MAPP and SPP). The Southeast is now the only large region of the contiguous United States without an ISO concept.

Byline: 
James F. Wilson
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Rethinking WEPEX: What's Wrong with Least Cost?

AFTER MUCH DISCUSSION AND INNOVATION, CALIFORNIA is scheduled to launch its new electricity market (known as WEPEX) on Jan. 1, 1998, and we have a chance to revisit the issues. In the earlier round of this conversation, now three years past, I argued that the debate contrasting pool and bilateral models for a restructured electricity market was missing the point. %n1%n

I had thought the pool versus bilateral debate would be over by now; having both would have solved it.

Byline: 
William W. Hogan
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