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Fortnightly Magazine - April 15 1998

ISOs as Market Regulators The Emerging Debate

Jeremiah D. Lambert

IN A RECENT SPEECH TO A SOPHISTICATED WASHINGTON AUDIence of electric industry players, FERC Commissioner William Massey raised a difficult question: "Can ISOs become self-policing institutions, thereby allowing FERC to embrace light-handed regulation of transmission?"

In answering his own question, Massey confirmed a quasi-judicial role for independent system operators (em but only if they are "equipped with proper operational rules, including market monitoring plans that report market power abuses and contemplate enforcement mechanisms to assure compliance." %n1%n

Despite such op

Selling Electricity Online? What the Internet Could Mean for Deregulation

Edward P. Meehan

IS IT A FAD OR BUSINESS? According to a recent SmartMoney %n1%n article, about 3 million customers traded $120 million in securities on the Internet last year, generating $700 million in commissions for online trading firms.

While this sum marks just 5 percent of total commissions for securities trading, it accounts for a healthy 30 percent of commissions for discount brokerage. Online trading firms, nonexistent several years ago, now total more than 50.

Frontlines

Bruce W. Radford

ATTENDED ANY HEARINGS LATELY AT THE FEDERAL ENERGY Regulatory Commission? They're getting ugly. I see a federal agency under siege (em from without and from within.

The Commission seems to have lost the easy confidence that reigned during Elizabeth Moler's tenure. Don't blame new Chairman James Hoecker. He's getting it from all sides, and it's not his fault.

Consider the bottomless pit known as electric system "reliability." We need new laws to pin down FERC authority.

People

EL PASO Energy Corp. named C. Dana Rice vice president and treasurer. Previously, Rice served as vice president of finance for Tennessee Gas Pipeline Co.

Duke Energy Power Services LLC named William F. Hall vice president and general manager of California operations. Previously, Hall was the regional manager for Duke Power's 2,700-megawatt Allen, Riverbend and Lincoln power plants in North Carolina.

Linda S. Lennox, who joined NUI Corp. in February 1997 as director of corporate communications and investor relations, was promoted to assistant vice president of the department.

Mail

Leonard S. Hyman

ON ECONOMICS OF RELIABILITY. I think Karl Stahlkopf's and Philip P. Sharp's comments on reliability ("Reliability in Power Delivery: Where Technology and Politics Meet," Jan. 15, 1998) fail on three issues, all of them involving money.

First, the authors imply annual savings "from deregulation" of around $9 billion per year. Are we really going through all this trouble for so little? Or has something been lost in the rounding process?

Second, they assert that the cost of power disturbances are $26 billion per year.

Mail

John S. Ferguson

DEPRECIATION, DEFERRAL, DENIAL. I have often discussed in Public Utilities Fortnightly the tendency for regulation to defer the recording and recovery of depreciation expenses. Therefore, Mr. William C. Schaeffer's discussion of this subject in the February 1, 1998 issue (see "Mail," p. 11) attracted my attention, especially his quoted claim of the Delaware public advocate that investors should be neutral to depreciation deferral on a present value basis.

My experience has been that present value arguments in regulatory proceedings relative to depreciation are in support of deferral.

Benchmarks

Christopher Seiple

BY THE END OF MARCH, CALIFORNIA, RHODE ISLAND, and Massachusetts planned to offer retail choice to customers. However, early signs suggest electric competition may fall short of expectations due to stranded cost recovery mechanisms and the desire of customers to protect themselves from risks inherent in a competitive market.

When the California market was about open, less than 5 percent of customers had elected to switch suppliers.

News Digest

Lori A. Burkhart, Phillip S. Cross and Beth Lewis

MICHIGAN CHOICE APPEAL. Michigan Attorney General Frank Kelley filed an appeal in the Michigan Court of Appeals of the Michigan PSC's Jan. 14 rehearing order (News Digest, March 15, 1998, p. 18) adopting a phase-in schedule for electric restructuring and retail choice for Consumers Energy and Detroit Edison. Kelley alleged that the order fails to create a competitive generation market or foster lower rates. He called it an "outrage," that gave the utilities everything they wanted. Case Nos. u-11290 et al., Feb. 13, 1998 (Mich.P.S.C.).

NEW HAMPSHIRE RESTRUCTURING. The U.S.

Perspective

George C. Loehr

AMERICANS ARE fascinated with lists. There are lists of just about anything you can name, from the Fortune 500 to baseball batting averages. There's even a book of lists. We especially like to rank "top tens," like the 10 best cities to live in or the 10 worst school districts in America. Television has popularized these lists.

News Analysis

Joseph F. Schuler Jr.

WHETHER DOING BUSINESS IN SANTIAGO OR Krakow, Budapest or Bang Kraui, American energy service companies agree: It's tough to find a lender to finance international projects.

ESCO executives working around the globe met to commiserate at the International Roundtable on Energy Efficiency Financing Feb. 26-27 at the Ritz-Carlton Hotel in Arlington, Va. Sponsors of the Roundtable included the National Association of Energy Service Companies and the Export-Import Bank of the United States.

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