ON MARCH 26, JUST BEFORE IT OPENED THE STATE'S electricity market at midnight on the 31st, the California Public Utilities Commission announced new interim rules to protect consumers, plus this...
measure include increasing the capacity of power plants and transmission lines that can be built without PSC approval, allowing for the construction of merchant plants, accelerating the time table for PSC approval of generation and transmission projects and making the entire process easier for developers. Also, it would grant authority to the PSC to (1) impose a state independent system operator, (2) require utilities to join an existing ISO, or (3) order utilities to sell their transmission assets if a regional ISO is not in place by June 30, 2000. The measure also would require a regional transmission constraint study.
MUST-RUN PLANTS. The FERC accepted the designations of "must-run" generating plants by the California Independent System Operator, identifying plants needed to maintain reliability of the state's power grid. Among other factors, it considered whether a plant could mitigate locational market power and whether charges passed on by the ISO would be just and reasonable. Docket Nos. ec96-19-012, er96-1663-013, March 11, 1998.
STRANDED COSTS. Citing the difficulty of distinguishing "wholesale" from "retail" stranded costs, the FERC scheduled a hearing to consider a proposal by Central Vermont Public Service Corp. to impose an exit fee to recover lost wholesales after New Hampshire opened its retail choice program.
With the start of retail access, the New Hampshire PUC had directed Connecticut Valley Electric Co. to terminate its wholesale purchased power contract with Central Vermont to allow its retail customers to choose their own power suppliers. The FERC had denied a request by Central Vermont for a stranded cost surcharge (the costs weren't "wholesale"), but asked the company whether it wished to amend its wholesale contract to add an exit fee.
The FERC called the situation "highly unusual," but indicated it won't interfere with the New Hampshire PUC's intent to deny retail stranded costs. Commissioner Massey said the case "illustrates the jurisdictional quagmire" of exit fees. He noted that "it appears the utility is getting a second bite at the stranded cost apple." Docket No. er98-1440-000, March 11, 1998.
PRIVATE POWER EXCHANGES. The Commission asserted jurisdiction over Automated Power Exchange Inc., declaring APX to be a public utility operating facilities for power wholesales, although APX will operate only a private power exchange, which will match buyers with sellers using a computer program to analyze bids. Commissioner Curt Hébert Jr. dissented, accusing the FERC of trying to regulate computer software. Docket No. er98-1033-000, March 25, 1998.
LNG STORAGE FACILITY. After a contentious discussion, the FERC voted 3-2 to set an expedited hearing for an application by Granite State Gas Transmission to build a liquefied natural gas storage facility in Wells, Maine. The facility would store 2 Bcf and deliver (on behalf of Northern Utilities Inc.) up to 134,000 MMBtu per day of vaporized LNG into Granite State's pipeline system and the proposed Portland Natural Gas Transmission System. Commissioner Curt Hébert Jr., who objected along with Commissioner Linda Breathitt, disputed the need for the project. Docket No. cp96-610-000, March 11, 1998.
Studies & Reports
RATE REDUCTION BONDS. U.S. utilities will issue $50 billion
to $150 billion in