No clear consensus has emerged. Should regulators hold to a hard line?
Regulators have wrestled for decades with transactions between vertically integrated monopoly utilities and their...
COSTS. The Arizona Corporation Commission ruled that electric utilities should enjoy a "reasonable opportunity" to recover all stranded costs, so long as they agree to divest generation assets and make "all reasonable efforts" to mitigate losses.
Under the rules, utilities would choose between two methods to calculate costs eligible for recovery: (1) divest all generation assets; or (2) determine revenues necessary to maintain financial integrity. Regulatory assets receive special treatment (100-percent recovery without a mitigation review), as do previously approved costs for social programs such as low-income assistance and conservation. Docket No. RE-00000C-94-0165, Decision No. 60977, June 22, 1998 (Ariz.C.C.).
RETAIL ELECTRIC CHOICE. The Alabama Public Service Commission asked for comments on whether retail electric competition will serve the state's interest. It also seeks comment on issues such as stranded costs, regulatory reform measures, market power and reliability. Docket 26427, June 15, 1998 (Ala.P.S.C.).
FIXED-PRICE GAS. Regulators in New York and Minnesota have each refined policies on fixed-price options for customers of natural gas local distribution companies.
In New York, after telling all LDCs in 1997 to offer fixed-price options to core customers to offset price volatility, the commission rejected a proposal by Orange and Rockland Utilities Inc. to offer similar commodity pricing options to large-volume, non-core customers. Such "broad authority," it said, would afford "excessive latitude" to O&R in competing with new entrants. Case 97-G-1645, June 4, 1998 (N.Y.P.S.C.).
In Minnesota the PUC allowed Minnegasco to open a pilot program offering an option to lock-in a fixed per-unit gas price for one year for small-volume firm customers, including residential users. It declined to force the company to allow participants also to choose alternate gas vendors, preferring simply to boost awareness of how gas service is priced and to gauge acceptance of new price options. Docket No. G-008/M-98-118, June 29, 1998 (Minn.P.U.C.).
SERVICE TERRITORY DISPUTES. The Virginia State Corporation Commission settled a boundary dispute between Virginia Electric and Power Co. and Prince George Electric Cooperative, where each wanted to serve a large industrial customer located entirely within the co-op's territory. Ruling for the co-op., the commission favored a "point-of-use" test, rejecting a "point-of-delivery" test applied by the hearing examiner. It added that state law continues to offer a "high degree of protection" for utilities for rights to an exclusive service territory. Case No. PUE960295, June 25, 1998 (Va.S.C.C.).
DSM INCENTIVES. The California Public Utilities Commission denied a bid by Southern California Edison Co. to introduce an electric revenue adjustment mechanism to mitigate the lack of incentive to reduce unit sales through conservation and demand-side management. It explained that the new ERAM was unlikely to work very well because of the rate freeze and other aspects of the state's electric restructuring law. R.94-04-031, I.94-04-032, Decision 98-06-023, June 4, 1998 (Cal.P.U.C.).
CAPITAL RECOVERY. The Florida Public Service Commission denied a request by Gulf Power Co. to amortize its investment in a new 15-megawatt cogeneration facility (a gas-fired combustion turbine), and instead has directed the company to capitalize and depreciate the plant, since depreciation might better account for unexpected changes in term of service or