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News Digest

Fortnightly Magazine - September 15 1999

remained frozen at 1997 levels, or producers reinvested fewer dollars in exploration and development?

"After analyzing the data from the sensitivities, we see a low probability that any of these five alternatives will occur or be sustained for a prolonged period," said John Cochener, GRI principal analyst. "The robust two percent annual growth we are anticipating in the baseline projection is both optimistic and realistic, offering what we think is the most likely outcome. However, unforeseen events could temporarily alter that view, which is why we assessed the impact of various effects on supply and price."

See "Gas Supply Sensitivities: An Alternative View of Gas Supply Trends" (GRI-99-0148). Contact Kelly Murray, tel. 703-526-7832, or

Generation Adequacy. A report prepared for the Edison Electric Institute suggests that regulators and system operators may continue to impose minimum requirements on load-serving entities for installed generation capacity to satisfy reliability needs, even as the deregulated generation sector makes investment decisions based on profitability.

The report, "Generation and Transmission Adequacy in a Restructuring U.S. Electricity Industry," by Eric Hirst, Brendan Kirby and Stan Hadley, reviews historical trends and future projections on adequacy investments and discusses how adequacy might be managed in the future. See

Stranded-Cost Securitization. Moody's Investors Service reports that Boston Edison's forthcoming $805 million securitization of stranded costs may represent a "model transaction," because of several factors, including (1) legal precedents in Massachusetts favoring bondholder rights, (2) local voter support for electric deregulation, and (3) reliable information on the degree to which BE asset costs exceed market valuations, available because the company is mitigating its stranded-cost exposure by divesting fossil and nuclear plants.

Contact study author Bruce Fabrikant, Moody's vice president and senior credit officer, at 212-553-3609.


Consumer Education. The Maine Supreme Court overturned a state PUC rule that had forced electric utilities to file advance copies of educational literature on retail choice prior to distribution, calling the rule an unconstitutional prior restraint on core free speech.

However, it left standing a rule allowing the PUC to order corrections in misleading or inaccurate materials after their dissemination to customers. Central Me. Pwr. Co. v. Maine PUC, Docket No. PUC-98- 290, 1999 WL 550034, July 29, 1999 (Me.).

Merger Review. In two companion cases, the Indiana Supreme Court struck down two state commission orders on proposed mergers between (1) Ameritech and SBC and (2) GTE and Bell Atlantic, saying that regulators lack authority to review transactions involving only utility holding company stock, rather than a direct transfer of utility assets. Indiana Bell Tel. Co. v. Ind. URC, No. 93S02-9906-EX-350, 1999 WL 553724, July 30, 1999 (Ind.); GTE Corp. et al. v. Ind. URC, No. 93S02-9907-EX-370, 1999 WL 553723, July 30, 1999 (Ind.).

Price Cap Plans. A Maryland appeals court upheld a price cap plan for Bell Atlantic, saying the plan need not guarantee a reasonable return on fair value in order to meet a state law authorizing alternative telephone regulation as long as rates are "just and reasonable."

It held that a price cap plan would meet the J&R rate standard