Although problems in the power business grabbed the headlines early this decade, the industry now seems fundamentally strong. In contrast to their ratings of banks, rating agencies appear to have...
• Regulatory Certification. Rules dismiss possibility of using certification by the Federal Energy Regulatory Commission or a state PUC to establish sufficiency of funds.
• TVA, Federal PMAs. Rules define term "federal licensee," but do not affect current financial assurance of Tennessee Valley Authority, the only current federal licensee for a nuclear power reactor. NRC says it "will review" TVA's funding.
• Responsible Party. Rules impose duty on both owners and plant operators to guarantee sufficiency of funding. NRC says rule won't likely affect industry reliance on operating service companies, since they can negotiate funding assurance with reactor owners.
• Accounting. Rules decline to use the unfinished exposure draft issued by the Financial Accounting Standards Board on closure and removal of long-lived assets as an accounting or reporting standard, noting that ultimate FASB action could not be predicted and appeared "delayed for a considerable time," warranting a search for an alternative standard.
For self- or parent-company guarantees, the NRC adopted a framework for funding assurance based largely on a financial test developed 15 years ago by the Environmental Protection Agency. It refused to refine that test, explaining that "deregulation is still in its earliest phases [so] it is not yet possible to identify or define the financial characteristics of entities that may ultimately be responsible for reactor decommissioning." 63 Fed.Reg. 50465, Sept. 22, 1998.
NUCLEAR LICENSE TRANSFERS. The Nuclear Regulatory Commission also has proposed rules to streamline hearings for approval of transfers of reactor or materials licenses. It noted a large recent increase in transfers due to mergers, and concluded that the only real issue in such cases is whether the license amendment accurately reflects the transfer, and does not involve operating methods or a "significant hazards consideration." 63 Fed.Reg. 48644, Sept. 11, 1998.
PACIFIC NORTHWEST. With a study from Bonneville Power Administration warning that the Pacific Northwest could experience winter power shortages of over 6,000 MW if water flows on the Columbia River should drop to historic lows, the Northwest Power Planning Council on September 1 launched an investigation of strategies to ensure reliable power supplies.
BP predicts that potential power deficits could exceed import capabilities, made up primarily of high-voltage power lines that connect the Northwest with the Southwest. According to NPPC member Tom Karier, "With restructuring of the electric industry, it is less clear who will have the incentive or the responsibility to address those shortages." The NPPC will consider a range of remedies, including investments in new power plants, energy conservation measures, and development of new power pricing policies.
Studies & Reports
MARKETER PERFORMANCE. The international consulting firm Frost & Sullivan has issued a new report, North American Wholesale Energy Marketers, examining the performance in 1997 of the top 20 North American companies in natural gas and power marketing. For more information contact Kathleen Cooney at (650) 237-4358.
ELECTRIC GENERATION. The Gas Research Institute released Electric Generation Sector Summary, predicting that average real electric prices will fall by more than 25 percent by 2015. The study (GRI-98/0009) marks one of a series from GRI's Baseline/Gas Resource and Analytical Center, and