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News Digest

Fortnightly Magazine - November 15 1998

grid. A three-part rate includes: (1) a monthly $300 administration fee, (2) a $75 per-meter charge, and (3) a maximum usage rate of $0.15 per thousand cubic feet. Case No. U-11766, Sept. 23, 1998 (Mich.P.S.C.).

Electric Retail "Choice". On rehearing of a 1997 order, which had set a date of July 1, 2000 to begin phasing in electric retail choice, the Maryland Public Service Commission has rejected appeals by Enron and would-be marketers to suspend its docket pending action by the state legislature. It also rejected claims that it lacked authority to issue its 1997 order, which called for an independent system operator to offset market power, plus a retail price cap to protect ratepayers from paying "unreasonable" prices during the anticipated multi-year transition to competition.

The PSC said that marketers had no due-process rights in the matter, since they held no state permit for electricity retailing (em "still a state-regulated monopoly," noted the PSC. Again the PSC declined to order competitive billing and metering for the July 1 startup date, noting it had already adopted a code of conduct for utility affiliates. Case No. 8738, Order No. 74561, Sept. 10, 1998 (Md.P.S.C.).

Electric Marginal Costs. The Oregon Public Utility Commission has revamped how it reconciles electric utility marginal costs with embedded-cost revenue requirements, now requiring each customer class to pay an equal percentage of marginal costs by function (generation, transmission, distribution).

It declined to mandate any single marginal cost allocation for distribution facilities, such as the "zero-intercept" method, but appeared to endorse the "minimum system" method and a "facilities design" approach, which anticipates maximum expected loads. It ok'd an avoided-cost method for generation, and said bulk power transmission lines should be classified to energy and demand in the same way as 20-year marginal costs for generation. It rejected any idea to treat metering and billing costs as "sunk" and exclude them from cost allocations. UM 827, Order No. 98-374, Sept. 11, 1998 (Or.P.U.C.).

Stranded Costs. The Oregon PUC also has set guidelines on electric utility stranded costs, defined as the difference between market and book values, as indicated by an arm's length sale, but the PUC acknowledged "significant political, legal, and economic uncertainties" over the sale of hydroelectric projects, given the five-year process needed for hydro plant relicensing.

It added that utilities must net transition costs against stranded benefits, such as lost entitlements to low-cost energy resources. The PUC noted: "An option to buy federal power at cost can have significant value, as evidenced by the recent exchange settlement negotiations between Portland General Electric and the Bonneville Power Administration." UM 834, Order No. 98-353, Aug. 24, 1998 (Or.P.U.C.).

Electric Retail Choice. The Iowa Utilities Board has ok'd a seven-year pilot program for MidAmerican Energy Co. to offer choice of generation supply to larger industrial and commercial electric customers, with a "market participation charge" to recover stranded costs on a revenues-lost basis. The company would still own and control metering and meter reading. Docket No. TF-97-229, Aug. 21, 1998 (Iowa U.B.).

Gas Retail Choice. The Montana Public Service Commission has accepted a