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News Digest

Fortnightly Magazine - June 1 1998

a power marketer's "source of generation" unless the marketer and generator are affiliated. Thus, the Michigan Public Power Agency (a generator) owed no reciprocal obligation after it supplied generation to power marketer Engage Energy US LP to serve Perrigo Co., a retail customer.

Dissenting Commissioner John C. Shea said the case should convince the PSC of the "unworkability of the reciprocity obligations" under the direct access tariff. "The potential for circumventing the requirement of reciprocity is quickly hardening into reality," he added. Case No. u-11651, March 20, 1998 (Mich.P.S.C.).

CONSUMER PROTECTION RULES. Under new rules for consumer protection adopted by the California Public Utilities Commission, energy service providers must post a $25,000 deposit or bond with the PUC to gain registration, plus enter a service agreement with the franchised utility distribution company in any territory that the ESP conducts business. ESPs must provide customers with a document setting forth price, terms, and conditions of service. The PUC suggested specific wording to ensure uniformity to help consumers make comparisons. Docket r.94-04-031/i.94-04-032, March 26, 1998 (Cal.P.U.C.).

PRICE CAP PLAN. The Maine Public Utilities Commission set up a price cap plan for Bangor Hydro Electric Co. to insulate core customers from the cost of discounts offered to large customers, but the plan will boost rates by $13 million in the short term, forcing ratepayers to support 85 percent of large-user discounts.

The price cap links electric prices to a weighted price index (gross domestic product), allowing for a 1.2-percent productivity offset. Any profits slightly greater than or less than a 12.75 percent allowed return on equity will be split equally between ratepayers and the company. The plan allows for consideration of certain "exogenous costs," including certain costs associated with the utility's ownership of the troubled Maine Yankee nuclear power station.

The PUC allocated the entire start-up rate increase to core customer class, rejecting a proposal to allocate part of the increase to larger customers because of the company's "relatively precarious financial condition." Docket No. 97-116, Feb. 9, 1998 (Me.P.U.C.).

NUCLEAR GENERATION. The New York Public Service Commission has launched further inquiries into the role of nuclear generation in a competitive electric market, after having received recommendations from its staff calling for a public auction of nuclear plants (along with other generation as well). Decommissioning costs remain the responsibility of the surviving transmission and distribution utilities and their ratepayers under the staff proposal. Nuclear plants not moving at auction would fall subject to an "administrative alternative," whereby the PSC would limit recovery of running costs to the wholesale price of power. Case 94-e-0952, 98-e-0405, Opinion No. 98-7, March 20, 1998 (N.Y.P.S.C.).

QF PRICING. The Oregon Public Utility Commission has ruled that electric utilities need not buy power from a qualifying cogeneration facility if the contract contains "adders" that bring the price above the utility's avoided costs. The case involved Portland General Electric Co. and two QFs, Oregon Energy Co. LLC and St. Helens Co-Gen LLC. Order No. 98-055, Feb. 17, 1998 (Ore. P.U.C.).

QF AVOIDED COSTS. Responding to the state's new electric restructuring law, the Maine