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News Digest

Fortnightly Magazine - October 15 1999

settlement was reached in the four-and-one-half year bankruptcy proceeding for Cajun Electric Power Cooperative, to allow The Southern Co. and NRG (a subsidiary of Northern States Power Co.) to acquire the wholesale co-op for over $1 billion, with Cajun selling its non-nuclear generating assets to Louisiana Generating LLC for $1.026 billion. Rival bidder Southwestern Electric Power Co. (SWEPCO), a subsidiary of Central & South West Corp., agreed to withdraw from proceedings in return for a $7.5 million payment from the Southern/NRG partners.

But although the settlement was confirmed Sept. 1 by bankruptcy judge Gerald H. Schiff, Southern Co. appeared unsure as to whether to proceed, as a recent federal appeals court ruling had indicated that the bankruptcy judge had overstepped by attempting in the settlement to block a state PSC rate order. See News Digest, Public Utilities Fortnightly, Oct. 1, 1999, p. 22

Courts

Pole Attachments. A federal appeals court upheld recent amendments to the 1978 Pole Attachments Act via the 1996 Telecommunications Act, denying claims by electric utilities that rules mandating access to utility poles for telephone and cable television wires were unconstitutional. The court acknowledged a "taking" of property, but said the act offered an adequate process to utilities for securing just compensation, to be determined by the Federal Communications Commission. Gulf Power Co. v. U.S., No. 98-2403, 1999 WL 699763, Sept. 9, 1999 (11th Cir.).

Natural Gas Explosions. In reviewing a $2 million damage suit following a 1994 gas explosion and fire at a Ramada Inn, an Illinois appeals court said claims regarding the design and 1961 installation of the gas piping system were barred by a 10-year statute of limitations, but not other claims concerning the continued sale of gas.

The court held the plaintiff could proceed on the theory that the gas company owed it an ongoing duty of care to operate and maintain the gas system in a safe manner. MBA Enterprises Inc. v. Northern Ill. Gas Co., No. 3-98-0305, 1999 WL 683850, Aug. 31, 1999 (Ill.App.).

Electric Transmission. Interpreting a 1995 state law, a Texas appeals court struck down state PUC rules that had required electric utilities to offer nondiscriminatory access to transmission service under a postage-stamp access fee plus a distance-sensitive rate component.

It said the commission lacked authority to set its own transmission rates, as the legislature had envisioned the PUC only as "an overseer" of private negotiated arrangements to ensure transmission access. City Pub. Serv. Bd. of San Antonio v. Texas PUC, No. 03-98-00127, 1999 WL 644729, Aug. 26, 1999 (Tex.App.).

Customer Choice Quotas. A Pennsylvania court upheld a state PUC plan forcibly to switch up to 80 percent of electric utility customers who otherwise elect not to choose an alternative power supplier under the state's retail choice plan, or who cannot find a new supplier willing to provide the requested service.

State legislator Camille "Bud" George had opposed the plan, claiming that mandatory assignment of customers to an "alternative provider of last resort," without customer consent, was akin to illegal slamming. George v. Pa. PUC, No. 3088 C.D. 1998, 1999 WL