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News Digest

Fortnightly Magazine - October 15 1998

APA's Snettisham hydroelectric project to non-federal owners for $82 million on Aug. 18.

The Alaska Power Administration Asset Sale and Termination Act of 1995 authorized the termination of APA and sale of all its assets under previously negotiated purchase agreements. They have pursued divestiture of APA's two hydroelectric projects since 1986.

POWER MARKETING ADMINISTRATIONS. The U.S. General Accounting Office has found that monitoring activities of the Department of Energy's four power marketing administrations do not ensure that the federal government recovers the full cost of its power-related activities from the beneficiaries of public power. The PMAs examined are Bonneville Power Administration, Southeastern Power Administration, Southwestern Power Administration, and Western Area Power Administration.

GAO further reports that where unrecovered power-related costs have resulted in financial losses to the federal government, and the problems have been reported to the PMA management, that progress toward resolving issues has been slow or nonexistent.

The report explains that the PMAs' costs and power-related costs of the agencies that produce the power marketed by the PMAs are required by law to be repaid. Repayment is to be made through revenues from federal power sales. Two congressmen, Rep. John R. Kasich (R-Ohio), chairman of the Committee on the Budget, and John T. Doolittle (R-Calif.), chairman of the Subcommittee on Water Power, had asked that GAO investigate the under-recovery of certain costs and the large amount of debt outstanding - over $14 billion as of Sept. 30, 1997.

Courts

OVERSEAS INVESTMENTS. A federal appeals court ruled that when a ratepayer advocacy group failed to raise legal issues at the administrative level, it lost any right to appeal a ruling by the Securities and Exchange Commission that had allowed Southern Company to invest up to 100 percent of retained earnings in certain exempt wholesale generators and foreign utility companies. The group had argued that the SEC erred by failing to require the utility to identify the individual investments and demonstrate that each one would not pose a substantial adverse impact on Southern's operating subsidiaries or their customers. Campaign for a Prosperous Georgia v. SEC, Nos. 96-8655, 97-8123, 1998 WL 466568, Aug. 11, 1998 (11th Cir.).

INDEMNITY FOR NEGLIGENCE. The Mississippi Supreme Court has declared void a liability indemnity clause in a state-approved contract between Entergy Mississippi Inc. and one of its industrial customers, explaining that the clause violated state law regarding a utility's duty to protect the public safety.

Entergy argued that the clause barred a suit by the customer's employees to recover damages for injuries sustained when a painting scaffold came into contact with power lines, claiming that the injury stemmed from the customer's illegal or unsafe work practices. Instead, the court said that regulators had exceeded their authority in approving the indemnity clause. It added that the clause would allow Entergy to escape liability for its own negligence in maintaining its power lines. Entergy Mississippi, Inc. v. Burdette Gin Co., No. 97-CA-00481- SCT, Aug. 6, 1998 (Miss.).

MOBIL/SIERRA DOCTRINE. The U.S. Court of Appeals for the District of Columbia Circuit has upheld a ruling by the Federal Energy Regulatory