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News Digest

Fortnightly Magazine - July 1 1998

on market economics.

PEPCO Services Inc. signed a contract with Ryder Transportation Services for the installation of energy-efficient technologies at locations nationwide. PEPCO Services will conduct a comprehensive, site-specific assessment of all energy systems at each location, including an energy audit and a cost/benefit analysis. PEPCO Services guarantee savings at each site, with the cost for each installation to be paid from a percentage of the savings.

Griffith Energy, a heating oil and propane provider, announced it's becoming part of Energetix Inc., a full-

service energy company. The acquisition, a cash transaction financed as an installment sale, is expected to be completed later this year.


NATURAL GAS CAPACITY RELEASE. The FERC ruled that Texas Eastern Transmission Corp. could refuse to relieve Public Service Electric and Gas Co. of liability for reservation charges under transportation and storage contracts, on the theory that PSE&G had sought to release capacity to an affiliate, Public Service Energy Trading Co., which allegedly was acting as a shell company created solely to absorb and default on the underlying obligations.

Dissenting Commissioner Curt Hebert Jr. faulted the FERC for looking beyond the four corners of the capacity release contract, instead of simply reviewing the language of the agreement. In his initial dissent filed in February, Hebert had described the ruling as "the first step down the road of requiring investigation into [the] parties' goal and motives behind the business decisions they make."

At rehearing, Hebert advised the FERC and Commission staff to "let go." That earned a retort from Commissioner William Massey that current law (Federal Power Act and Natural Gas Act) "make it a little difficult." Chairman James Hoecker asked, "Are we looking behind the contracts or are we ensuring that they will be honored?" Answering his own question, Hoecker concluded, "Here, we are doing the latter." Docket No. RP98-83-001, April 29, 1998.

POWER MARKETING AFFILIATES. The FERC a show cause order after finding Washington Water Power Co. violated comparability rules under Order 888 by agreeing to provide "interruptible firm" transmission service to its affiliated power marketer, Avista Energy, including services beyond those authorized in the pro forma transmission tariff. The FERC was considering having WWP return any profits from the transactions at issue and forfeit market-based rate authority for up to six months.

"This is an important and serious order," said James Hoecker, FERC chairman.

Although violations were rare, the case showed the FERC was willing to test utilities and affiliates. Commissioner Hebert said he supported the order, but said the proposed penalties were "extreme." Docket No. ER09-852, April 29, 1993.

NETWORK TRANSMISSION CREDITS. After approving the utility's open access transmission rates, the FERC set for hearing a new method proposed by Northern States Power to compute a credit for any of its customers owning transmission facilities integrated with the regional power grid.

The FERC will consider separately NSP's contention that the crediting for facilities owned by the network customers is not working as envisioned under section 30.9 of the pro forma open access tariff. NSP does not believe that the crediting provisions should apply in