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News Digest

Fortnightly Magazine - May 1 1998

Ratings Service recently released U.K. Electrics: Another Year of Change, which predicts that in 1998 the U.K.'s electric sector will experience the same growth in activity seen in 1997 as power companies grapple with competitive and regulatory shifts affecting pricing and generation. Acquisitions of distribution companies dominated 1997, as all but one of the original 12 regional companies in England and Wales were acquired by the end of the first quarter. In 1998, S&P foresees consolidation in the supply sector.

U.S. POWER DEMAND. Margins Under Fire: Wholesale Power Price Forecast for Western US Markets, 1997-2011, a report by Resource Strategies, finds that West Coast utilities have underestimated their future power needs, and will need about 25 more generating plants than currently planned. The study also said the Bonneville Power Administration and the Northwest Power Area, long the dominant supplier in the WSCC area, may already have lost their leadership status.

INCENTIVE REGULATION. The Committee on Energy Resources and the Environment, at the National Association of Regulatory Utility Commissioners, has released a report, Performance-Based Ratemaking in a Restructured Electric Industry. The report looks at existing PBR programs and reviews how state regulators have set up different forms of PBR for vertically integrated utilities. The report suggests ways to use PBR in a competitive electric industry. Also, the report provides insights for those wanting to retain a more traditional industry structure. Copies may be ordered from NARUC, P.O. Box 684, Washington, D.C., 20044.

POWER MARKET DATA. The Business Communications Company Inc. recently published a study, The Changing Electric and Gas Utility Business (No. re-087), which details sales and revenue data in power markets and predicts that by 2002, sales tracking systems will record sales and revenues by function, rather than by utility type. More information is available through BCC's Web page at www.buscom.com/editors.

FERC

GENERATION PLANT DIVESTITURE. The FERC approved the sale of electric generating facilities by two subsidiaries of the New England Electric System to USGen New England, finding no adverse effect on relevant markets. It approved market-based sales rates for the divestiture. The NEES subsidiaries, New England Power Co. and Narragansett Electric Co., are involved in restructuring for retail competition in Massachusetts and Rhode Island.

The sale includes almost all nonnuclear generating assets owned by NEES: (1) 4,000 MW of fossil-fired and hydroelectric generating capacity owned by NEPCO; (2) Narragansett's 10-percent interest in the Manchester Street generation station; and (3) Narragansett's 20-percent interest in the Ocean State IPP. Docket Nos. ec98-1-000, er98-6-000, Feb. 25, 1998, 82 FERC ¶ 61,179.

QF CERTIFICATION. In a case involving qualifying cogenera-

tion facilities, the FERC announced that it will not revoke QF status for any facility that sold power in excess of "net output" under a contract entered into on or before June 25, 1991 (em the date of the commission's Turners Falls decision (55 FERC ¶ 61,487), which first set the rule that QF sales exceeding net output will violate the QF ownership test for certification.

In Turners Falls, the FERC explained that if a QF acquires auxiliary power from a utility to meet