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News Digest

Fortnightly Magazine - November 15 1998

State PUCs

Electric Retail Choice. The Arkansas Public Service Commission has issued its final report on electric restructuring, citing a "broad" consensus favoring competition. It predicts immediate benefits for industrial customers, but warns that residential users likely will not see any quick rate cut. The PSC saw competition as consistent with action in neighboring states:

• Oklahoma. State law mandates retail choice by July 1, 2002.

• Mississippi. PSC plan would phase-in competition from 2001 to 2004.

• Missouri. Pilot program ok'd by PSC for 5000 large-volume customers. Legislation introduced to allow competition by Jan. 2000.

The PSC asks state legislators for authority to (1) mandate divestiture of utility assets, (2) impose intrastate reciprocity, and (3) approve line construction to assure transmission capacity. The PSC favors competition in metering and billing, but to begin no sooner than the startup for retail energy choice, or perhaps even later. Docket No. 97-451-U, Oct. 1, 1998 (Ark.P.S.C.).

Legislative Immunity. Citing an infringement on its authority, the New Mexico Public Utility Commission rejected a settlement signed by El Paso Electric Co., large power users, the state attorney general, the U.S. Dept. of Defense, and the PUC's advocacy staff, to the extent the deal would have made rates immune to any cuts forced by state legislators.

Otherwise, the deal binds EPE to divest transmission and distribution from other activities, but EPE need not acquire renewable resources prior to a subscription demand by customers. The PUC rejected a special low-income rate as illegal. Case No. 2722, Sept. 24, 1998 (N.M.P.U.C.).

Electric Retailers. Bucking opposition from both Enron and many investor-owned electric utilities, the Ohio Public Utilities Commission denied rehearing on most challenges to rules it adopted in July that set service and safety standards for "electric service companies" selling electricity at retail. The PUC said it was doing "no less and no more" than it had in rules already in place for conjunctive electric services.

Enron had opposed the regulation of retailers, aggregators or those selling submetering services. Dayton Power & Light, FirstEnergy, American Electric Power, and Cincinnati Gas & Electric all argued the PUC had no authority over retailers, as state law sets no special status for sellers who don't own power lines. AEP and CG&E also fought rules extending winter disconnection restrictions to nonresidential customers, claiming to no avail that business cutoffs posed no health or safety issues. Case No. 97-1578-EL-ORD, Sept. 24, 1998 (Ohio P.U.C.).

Customer Aggregation. The Ohio PUC has also held that an electric utility operating company may act as an aggregator in its own right under PUC rules for "conjunctive electric service," whereby groups of customers can negotiate prices and other terms of service. However, any employee of the utility (or its affiliate) engaged in aggregator services cannot access the utility's customer database without the customer's written consent. Case Nos. 96-405-EL-COI et al., Sept. 24, 1998 (Ohio P.U.C.).

Merchant Gas Transportation. The Michigan Public Service Commission has ok'd a tariff for SEMCO Energy Gas Co. for off-system transportation of natural gas, allowing unaffiliated local utilities and producers to move their own gas across SEMCO's distribution