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News Digest

Fortnightly Magazine - February 15 1999

double the figure for 1998 - though net additions of transportation capacity will drop.

Spending will rise from $2.9 billion (1998) to $3.1 billion and $6.3 billion (1999, 2000). However net new capacity (1999: 8.2 billion cubic feet per day; 2000: 7.8 Bcf/d) will fall short of the 11 Bcf/d added in 1998, according to the report, "Natural Gas Pipeline Network: Changing and Growing."

The difference occurs because 1998 construction mostly involved expansion of existing lines, while later work involves construction of new long-distance systems, such as the Alliance, Independence, Tri-State and Vector projects, many of which will bring gas from western Canada to the Chicago hub and points East. The report is available at http://www.eia.doe.gov.

FERC

Nuclear Plant Decommissioning. The Maine PUC voted on Dec. 22 to join a settlement of two cases at the FERC concerning decommissioning costs for the Maine Yankee nuclear plant and the prudence of the plant shutdown, in terms of replacement power costs and the impact on retail electric rates in the state of Maine.

The settlement would cut Maine Yankee decommissioning rates by nearly 10 percent per year, reduce allowed return on common equity from 10.65 percent to 6.5 percent and require plant owners to trim stranded cost recovery if replacement power costs should exceed initial estimates. However, Maine Yankee could seek to recover spent fuel storage costs from the Department of Energy. Docket Nos. ER98-570-000, EL98-14-000 (F.E.R.C.).

Power Supply Contracts. Central Illinois Light Co. (CILCO) filed a complaint at FERC alleging that Central Illinois Public Service Co. (CIPSCO) violated long-term power supply contracts.

CILCO alleged that CIPSCO promised to provide CILCO with "continuously available" capacity through 2009, with the right to buy energy at capacity cost plus 10 percent, but was diverting the reserved capacity to Union Electric, an affiliate of CIPSCO by way of the 1997 Ameren merger, and instead was buying energy on the spot market and charging CILCO the higher market price.

"We did not agree to pay CIPSCO $10 million per year for capacity so that CIPSCO could purchase energy on the spot market and resell it to us," said Robert Viets, CEO of CILCO. According to Viets, CIPSCO has taken part in affiliate favoritism, which FERC has "condemned." Docket No. EL99-17-000, filed Dec. 22, 1998 (F.E.R.C).

Electric Reliability

Gas-Fired Generation. The California ISO was plunged into a "stage-two" emergency on Dec. 21, forcing a scale-back of load on the state's transmission system.

Extreme cold in the Northwest extending into northern California temporarily caused shortages of natural gas due to heating demands. The shortfall affected fuel supply to generate electricity, reducing the amount of backup power available. Transmission line congestion created additional problems, as the states in the Southwest, not suffering from the cold weather, sent surplus electricity via California to the Northwest.

A stage-two emergency occurs when operating reserves dip below 5 percent, or are expected to drop that low within two hours. At that point, the ISO asks California's utilities to implement their load management programs.

State PUCs

Electric Distribution Tariffs. Citing a time crunch under state