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News Digest

Fortnightly Magazine - September 1 1998

system operator to manage transmission. The PUC has said that membership in the yet-to-be-formed Midwest ISO would satisfy that requirement. Docket No. A-110150F.0015, April 30, 1998; June 29, 1998 (order granting rehearing) (Pa.P.U.C.).

SIERRA + NEVADA POWER. Sierra Pacific Resources and Nevada Power Co. filed their merger application at the Nevada Public Service Commission on July 7, proposing to divest their electric generating facilities if they complete the deal. They would apply the capital to build more transmission and distribution facilities.

In the application, the companies estimate the merger will save $350 million over 10 years. They propose a long-term rate freeze for transmission and distribution services, plus an incentive mechanism to share merger and other benefits. Earnings greater than a 12-percent return on equity would be shared equally with customers. "In a restructured industry, bigger is better," said Malyn K. Malquist, SPR chairman, president and CEO. On Dec. 31, 1999, electric generation in Nevada will open to competition.

AEP + C&SW. The American Public Power Association and the National Rural Electric Cooperative Association have filed protests against the proposed merger of American Electric Power with Central & Southwest Corp., asking the Federal Energy Regulatory Commission to change its standard of review so as to approve the deal only if the applicants can demonstrate that any diminution in competition is outweighed by "legitimate, verifiable benefits" for consumers.

They ask the FERC also to impose a temporary moratorium on utility mergers involving large companies, but acknowledge that some mergers might enhance efficiency. The AEP/C&SW merger would create the nation's largest power company. FERC Docket No. EC98-40.

Studies & Reports

NEW YORK RESTRUCTURING. The Committee on Energy of the Association of the Bar of the City of New York released a 75-page report on electric restructuring in the state, which claims that other states and electric companies will watch its progress closely. In Electric Utility Restructuring in New York: A Status Report, the energy committee noted that many efforts depicted in the document are emerging and often untested. "This report provides in-depth information on issues, such as current rate plans, stranded cost recovery, divestiture of generation facilities, and retail access schedules, for each of the seven electric companies in the state," said Charles M. Pratt, primary author of the report and a partner at Dickstein Shapiro Morin & Oshinsky LLP. (The report is available at www.dsmo.com.)

NATURAL GAS FORECASTING. According to a new forecast by the American Gas Association, natural gas consumption is expected to increase more than 40 percent by 2015 due to strong industrial demand, greater popularity among new home buyers and increased use in new gas-fired generating facilities. This growth should expand the gas share of the U.S. energy market to greater than 28 percent. A.G.A. predicts continued growth in U.S. natural gas consumption, market share and production through 2015. Total U.S. natural gas consumption is projected to rise from an estimated 22.6 quadrillion Btu (quads) in 1997 to 31.9 quads in 2015. The strongest growth is expected in electric production via gas-fired generation capacity. Electric utilities are projected to