Utility executives face volatile energy markets, skyrocketing fuel prices, and changing federal energy policies. How are utilities benefiting from the turnaround in energy trading?
the Standing Committee (em are addressing specific issues raised in the 1997 blue ribbon report that appear problematic: Who gets funded to ensure reliability? Who is charged to cover those costs? How are funds collected and managed?; What are the responsibilities and qualifications for the NAERO board? How many board members? How elected? Who is a member of NAERO?; How to develop a framework for legislative support for NAERO, which will oversee an interconnected electric system crossing international borders?
Mergers & Acquisitions
ALLEGHENY-DUQUESNE. The Pennsylvania Public Utility Commission recommended approval of the proposed merger of Allegheny Power System Inc. and DQE Inc. but made approval contingent upon the utilities joining a functioning independent system operator. Docket No. a-110150f.0015, March 25, 1998 (Pa.P.U.C.).
The PUC rejected a proposal made in March by two PUC administrative law judges to delay the merger for 18 months due to market power concerns.
While pleased with the decision, the utilities expressed concern over the ISO requirement. "The commission requirement to join a 'fully functioning' ISO before merger consummation takes the merger out of our hands," said Michael P. Morrell, senior vice president and CFO of Allegheny.
The utilities plan to ask for reconsideration. On April 13, the companies applied to join the Midwest ISO, contingent on completing their merger. They will ask for merger approval on that basis. The Midwest ISO already has an application pending before the Federal Energy Regulatory Commission and is expected to be operational in two years.
LILCO-BROOKLYN UNION. The New York Public Service Commission has approved a settlement finalizing the merger of Brooklyn Union Gas Co. and Long Island Lighting Co., or what is left of LILCO (fossil generation and gas distribution facilities) after the transfer of its Shoreham plant and transmission and distribution facilities to the Long Island Power Authority. It found that the merger will increase vertical control and market concentration in the gas distribution market, but felt that such concerns would be "adequately mitigated" by the likelihood that competitors would enter that market. Case 97-m-0567, Opinion No. 98-9, Apr. 14, 1998 (N.Y.P.S.C.).
ENOVA-PACIFIC ENTERPRISES. The California Public Utilities Commission has approved the merger of Pacific Enterprises and Enova Corp., the respective holding companies for Southern California Gas Co. and San Diego Gas & Electric Co. It required SDG&E to divest its gas-fired electric generation (the utility had already announced that intent last November), and forced SoCal Gas to divest its options to purchase the Kern River and Mojave gas pipeline systems. However, it refused to require the gas utility to divest its transmission and storage assets: "Divestiture, if needed, should be statewide¼ there is no cost analysis [and] the remaining distribution system would be devastated." Decision 98-03-073, A. 96-10-038, March 26, 1998 (Cal.P.U.C.).
RECIPROCITY. Drawing a distinction between power marketers and generators, the Michigan Public Service Commission has held that while the direct access tariff for Consumers Energy Co. requires all other sellers in the utility's service area to offer reciprocal access to Consumers Energy for an equal amount of load, that rule does not apply to