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Fortnightly Magazine - February 15 2000

News Digest

Mergers & Acquisitions

NSP + New Century. The Federal Energy Regulatory Commission OK'd the merger of Northern States Power Co. (NSP) and New Century Energies Inc. (NCE), to form Xcel Energy Inc., on condition that the new company would join the Midwest Independent System Operator. FERC Docket No. EC99-101- 000, Jan. 12, 2000, 90 FERC ¶61,020.

* Rate Pancaking. The FERC found no problem with transmission rate pancaking with the MISO condition, even though NCE subsidiary Southwestern Public Service Co. (SPS) belongs to the rival Southwest Power Pool.

Mail

Ruth K. Kretschmer; C. Clark Leone; Jose A. Rotger

"Sensible Approach" or Misguided Meddling?

The proposal by Reps. Franks and Meehan to sell federal power at market rates provokes conflicting responses from readers.

I am writing in response to an article written by Reps. Franks and Meehan entitled, "The Sensible Approach: Federal Power at Market Rates," published in the Nov. 1, 1999 edition of Public Utilities Fortnightly (see pp. 44-47). I agree that it is outrageous that electricity services for people in the Northwest are subsidized (regardless of the customers' ability to pay) by the rest of the people in this country.

Perspective

Craig A. Glazer

I know what you are thinking. We're in an age of deregulation, so the role of the state public utility commission is diminishing. You feel you can cut back on your regulatory affairs staff and concentrate on your business - on your marketing plan. Well, think again.

"Deregulation" doesn't quite describe what's happening today in energy and telecommunications. In reality, we are restructuring, not deregulating. And restructuring will raise a number of difficult issues that, like it or not, must survive review by your friendly state regulator.

News Analysis

Carl J. Levesque

Utility restructuring seems to prompt more lawsuits by customers.

In Chicago, Commonwealth Edison Co. settles a class action lawsuit for a heat-wave outage, paying $2.5 million for items including "food spoilage," to customers served by certain city substations. In California, Pacific Gas & Electric Co. spends $8.3 million to resolve 98 percent of some 6,600 outage-related claims.

Pricing the Grid: Comparing Transmission Rates of the U.S. ISOs

Laurence D. Kirsch

How does each region manage congestion, allocate losses and dispatch resources? Which players gain the most from each approach?

The United States now has six independent system operators, five approved by the Federal Energy Regulatory Commission and one approved by the Public Utility Commission of Texas. These ISOs present an astonishing array of similar and conflicting rules and philosophies by which transmission services are defined and priced.

This article aims to explain some of the key similarities and differences among the ISOs' transmission pricing schemes.

Getting It Right: The Real Cost Impacts of a Renewables Portfolio Standard

Shimon Awerbuch, Ph.D.

How to justify green power without apologizing for the price.

.Tx

Policymakers have shown considerable interest in the concept of a renewable portfolio standard (RPS), and how it might affect the cost of energy.

The RPS would require electricity providers to include a small amount of renewables-based power - typically less than 3 percent or 4 percent - in their resource mix.

Frontlines

Bruce W. Radford

How 165 lawyers were mostly on the wrong side in the biggest electric merger to date.

With Warren Buffet buying up MidAmerican Energy as his own personal utility, and Bill Gates taking a stake in Avista, the standard electric merger starts to look tame.

For that and other reasons, I believe it's all but certain that the Federal Energy Regulatory Commission will soon OK the electric industry's biggest-ever merger, combining American Electric Power Co. with Central and South West Corp.

People

Vicky A. Bailey, a member of the Federal Energy Regulatory Commission, has left the FERC to serve as president of Cinergy Corp.'s PSI Energy Inc. unit in Indiana. Bailey served on the Indiana Utility Regulatory Commission before joining FERC in 1993.

Janet Gail Besser, chair of the Massachusetts Department of Telecommunications and Energy for two years and a board member since 1995, resigned in December. She was to join consultant Lexecon Inc. in March.

SEMCO ENERGY Inc. named Barrett Hatches president of ENSTAR Natural Gas Co. He succeeds Richard Barnes.

Benchmarks

Christopher Leshock

While coal demand for electric generation is expected to increase, recent environmental suits could give alternative fuels an edge.

The future of the U.S. coal industry is increasingly uncertain as witnessed by new environmental regulations and legal proceedings. Last year was a benchmark period, as environmentalists and the federal government separately filed lawsuits to further control surface mining in West Virginia and coal-fired emissions, respectively. Despite these developments, the use of coal for electric generation continues to grow.