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Fortnightly Magazine - February 1 1998

How Commodity Markets Drive Gas Pipeline Values

Has rate regulation become obsolete for natural gas pipelines?

Mary Lashley Barcella

On Jan. 30, FERC will hold a public conference to review the financial health of the pipeline industry. It will ask whether its regulatory framework still works; whether pipelines can still attract new capital for investment. Does rate policy threaten the financial integrity of the pipeline industry? That very question may come before the Commission. Nevertheless, FERC need not look far for an answer. If the pipeline industry should lie at risk, the cause may go no farther than the Commission itself. In fact, FERC ratemaking policy for gas transportation service now appears to jeopardize the ability of pipelines to recover costs.

A Second Opinion on Network Architecture Why a "closed" system is actually "open"

Chris S. King

METERING issues can be confusing, especially as they relate to

new technologies and electric deregulation. However, only three guiding principles are needed to protect consumers and to ensure fair competition.

First, consumers need accuracy, safety and reliability. These are ensured through adherence to ANSI C12 standards.

Second, they need public, or "open," access to both meters and communications (with passwords to protect privacy).

Reliability or Profit? Why Entergy Quit the Southwest Power Pool

David E. Dismukes and Fred I. Denny

ON OCT. 31, 1997, ENTERGY CORP. AND 16 OTHER MEMBERS

announced their intention to withdraw from the Southwest Power Pool regional reliability council and join the neighboring Southeastern Electric Reliability Council. The announcement shocked the SPP and its members, plus other industry observers and stakeholders.

While significant in number, the withdrawals do not necessarily signal widespread displeasure with SPP's initiatives and performance.

Selling Energy to the Federal Government

Frederick Moring and Raymond F. Monroe

THE FEDERAL GOVERNMENT IS THE NATION'S SINGLE largest energy consumer. It buys billions of dollars of electricity and natural gas from utilities each year. Deregulation, and the competition it brings, will change how the government buys these services.

For utilities that signed contracts with the government in the past few years, the future may be here. Utilities must read their contracts carefully; they must know which rules apply to them, and try to comply. Noncompliance can lead to criminal and civil penalties for the utility and its employees.

Integrating Metering & Information Systems

Ralph D. Masiello

YEAR 2000. MILLENNIUM. DEREGULATION. Each word strikes fear into the heart of meter manufacturers and utilities alike. Like the turning of the century, deregulation is coming for the electric utility industry, and sooner than we think. How will it affect the metering industry?

The first real indication can be found in California. There, by order of the state public utilities commission, the customer's energy supplier (the energy service provider or the utility distribution company) will, for the time being, own the meter.

Should Metering Stay at the Stand-Alone Disco?

George R. Pleat

MANY STATES ARE CONSIDERING THE IDEA OF opening billing and metering to competition at traditional distribution companies. %n1%n Electric utility executives can no longer assume that a regulated monopoly distribution company, or "disco," will retain control of both the "wires" function and billing and metering services. %n2%n

This new prospect raises questions: Should a disco seek to retain billing and metering as a regulated monopoly, complete with the obligation to serve all customers requesting electric connections?

SPP's Transmission Pricing

Bruce W. Radford

On Dec. 19, attorneys for Southwest Power Pool Inc., filed with the Federal Energy Regulatory Commission in Washington D.C., an open-access transmission tariff to provide for "one-stop-shopping" for short-term firm and non-firm point-to-point transmission service across seven southwestern states, SPP submitted the tariff as agent for its participating member public utilities and on behalf of all of its members. See, FERC Docket No. ER98-1163.

Frontlines

Bruce W. Radford

Gas utility executives never tire of telling how the regulators won't let them make money any money selling gas.

Interstate Power Co., which distributes both gas and electricity in Illinois, laments that no one understands: "Almost all small volume customers do not realize that their local distribution company does not make any money on the sale of gas¼ even large transportation customers have difficulty dealing with the concept."

So why would any LDC oppose retail gas competition?

People

The American Gas Association elected its board of directors for 1997-98. David W. Biegler, president and COO of Texas Utilities Co., was elected chairman. Richard E. Terry, chairman and CEO of Peoples Energy Corp., was elected first vice chairman and Gary L. Neale, chairman, president and CEO of Northern Indiana Public Service Co., was chosen second vice chairman.

Beth Emery was appointed vice president and general counsel to the California Independent System Operator executive management team. Emery was previously a partner in the law firm of Sutherland, Asbil & Brennan.

Mail

William C. Schaffer

"Water Rates: A Second Look"

As one who has worked in the regulatory environment for the last 23 years, certain accounting treatments deserve a second look to bring us back to basics. I raise the point because of an article I recently read by Dr. Janice A. Beecher and Dr. Patrick C. Mann, "Real Water Rates," published in the July 15, 1997 Public Utility Fortnightly (p. 42). At the outset, allow me to say that the opinion expressed is my own and does not represent the official position of the Delaware Public Service Commission.

In the portion of Dr. Beecher's and Dr.

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