Many utilities engage in hedging to protect customers from price spikes. But unless regulators are involved in crafting and monitoring these programs, they can turn into speculative ventures that...
PSC - Restructuring Orders
programs. See, Case 96-E-0891, Opinion No. 98-6, March 5, 1998 (N.Y.P.S.C.).
NIAGARA MOHAWK POWER CORP. RETAIL CHOICE: Begins in 1998 for large industrial and commercial customers; available for all by Jan. 1, 2000. SAVINGS: Immediate 25-percent cut for the very largest industrial and commercial customers. By 2000, all industrials to save about 13 percent, versus 3.2 percent for residential and small commercial classes (many of whom may see no decrease, and perhaps an increase). PSC defers final decision on proposed customer charges for residential and small commercial classes that would produce net rate increase in some cases. Order admits that generation backout rate is "low" (reflects fuel costs and wholesale prices in New York Power Pool) but rejects Enron proposal for higher rate of 3.95 cents per kWh, reflecting property taxes and higher NYPP reserve margin (18 percent, up from 14 percent). DIVESTITURE: Company may retain 15 percent of any gain above net book value as incentive for sale of non-nuclear generation. Nuclear generation would remain with the regulated T&D company. RETURN ON EQUITY: Company assumes $2 billion in stranded costs by accepting "very low" equity return over 5 years. OTHER: Approves "floating" competitive transition charge to fund $3.6-billion debt needed to execute settlement with 16 independent power producers to restructure uneconomic purchased power contracts. Exit fees and backup service charges for on-site generators designed to make CTC nonbypassable. Provides third-party administrator for system benefits charge. Set up $10 million fund for employee retraining/outplacement/severance. See, Case 94-E-0098, Opinion No. 98-8, March 20, 1998 (N.Y.P.S.C.).
ORANGE & ROCKLAND UTILITIES INC. RETAIL CHOICE: Begins May 1, 1998; offered to all by May 1, 1999. Company to file plan to make billing/metering services competitive by May/December 1999. SAVINGS: Large industrials can realize average price of 6 cents/kWh (assumes 8.5 percent cut). For "all other customers," rates cut 1.09 percent in first year, 1 percent in second, following other recent cuts. $32.4 million in total customer rate cuts over 4 years ($21.6 million for residential and small business). DIVESTITURE: Assumes transfer of generation by May 1, 1999. Gains accrue first to "all-other" group (see above), up to equivalent of 5 percent rate cut. Portion of uneconomic costs recovered through CTC, with CTC cut back if divestiture is delayed and expiring if no transfer by Oct. 31, 2000. No CTC if assets sold prior to May 1, 1999. RETURN ON EQUITY: Predicated on 10.4 percent. Ratepayers get 75 percent of excess earnings above 11.4 percent. OTHER: System benefits charge of about one mill per kWh ($3.2 million per year) funds demand-side management and other public policy initiatives. Offers $7.5 million for employee severance/retraining/outplacement. See, Case 96-E-0900, Opinion No. 97-20, Dec. 31, 1997, 182 PUR4th 201 (N.Y.P.S.C.).
ROCHESTER GAS & ELECTRIC CORP. RETAIL CHOICE: Available to new customers and 10 percent of energy load for existing customers (all classes) by July 1, 1998; 20 percent by July 1, 1999; 30 percent by July 1, 2000; in full by July 1, 2001. SAVINGS: 10 percent rate cut for large industrials (to achieve average rate of 5.6 cents per kWh);