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News Digest

Fortnightly Magazine - February 1 1999

sales.

"The study shows," notes Hill, "that during peak periods, the volume of released capacity transactions drops significantly as shippers are forced to the rebundled market." The A.G.A. (among many) has urged the FERC to remove the price cap on the maximum rate for released capacity.

Renewable Portfolio Standards. In its newly released study "Energy Outlook 1999," the U.S. Energy Information Administration reports that the proposed federal Comprehensive Electric Competition Act, if passed, would require that 5.5 percent of electricity be generated from renewable sources other than hydroelectric by 2010. That would produce a cut in carbon emissions of some 20 million metric tons by 2010 and 25 million metric tons by 2020, putting electric prices in 2010 about 2 percent higher than otherwise. After 2010, the price impact would lessen as technologies become more economical. To access the report, go to http://www.eia.doe.gov/oiaf/aeo99/homepage.html.

European Electric Markets. According to new research by Andersen Consulting, the steady opening of Europe's electricity markets, due to start Feb. 19 under the European Union's Electric Directive, will boost natural gas use in Europe. Some causes are the effects of price pressures from electric supply competition, new gas-fired cogeneration technologies and an improved trans-European gas supply network.

The study predicts that smaller, cleaner forms of generation located closer to demand will replace large central-station plants, reducing the need for long-distance transmission. It forecasts that by 2015, between 30 and 40 percent of European power will likely come from natural gas, up from just 7.5 percent in 1992. For more information, go to http://www.ac.com.

State Legislatures

Long-Term Outlook. Passage of new state laws on electric restructuring likely will remain slow in 1999, due partly to high turnovers in state legislatures that will make passing laws related to stranded cost recovery more difficult, according to the Standard & Poor's Ratings Services.

It added that referendum attempts in Massachusetts and California, though unsuccessful, discouraged some states from moving forward.

Electric Restructuring. Michigan Gov. John Engler expressed disappointment after electric restructuring legislation died in the legislature on Dec. 12 - the last day of the session.

The Michigan PSC in June 1997 had ordered a multi-year phase-in of electric competition. Major electric utilities had hoped the legislature would act and supersede the PSC order. Detroit Edison, Consumers Energy and Michigan attorney general Frank Kelley have filed a lawsuit challenging the authority of the PSC to take jurisdiction over restructuring.

The original restructuring bill offered in Michigan would have included a four-year rate freeze and limited transition fees. But the state senate, unable to agree, passed another plan that would have given the PSC authority over restructuring.

News Digest is compiled by Lori A. Burkhart and Phillip S. Cross, contributing legal editors, and by Beth Lewis, editorial assistant.

Clarification

The following notes should have appeared with the table, "Return on Equity - PUC Determinations," in the December News Analysis (see "Rate of Return: Still an Issue at PUCs," Public Utilities Fortnightly, December 1998, p. 14). We regret the omission.

*NOTES:

All dollar amounts in millions (M). Rate adjustments rounded to nearest