FERC’s market-power screens have been tested and found wanting in some areas. The author examines the screens’ strengths and weaknesses, then proposes future solutions.
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. It explained that since SPS does not now offer grid service in SPS through a regional tariff, any SPS transmission customers "already pay two transmission rates."
* MISO Connection. The parties also acknowledged that SPS is not physically connected with any MISO company, but felt that MISO soon would gain more members, so that SPS should be able to link up by the time MISO becomes fully operational. If not, SPS would link to MISO through Ameren by purchasing 200 megawatts of line capacity through Public Service Co. of Oklahoma.
* Oklahoma Consent. On Jan. 10, the Oklahoma attorney general and the staff of the state PUC had filed a stipulation telling the FERC they would not oppose the merger, as long as SPS would agree to share certain savings and benefits with Oklahoma retail ratepayers.
* Minnesota Concessions. Still earlier, environmental groups in Minnesota had ended their opposition to the Xcel deal after NSP had agreed to commit to buying renewable energy, improve efficiency at power plants, study use of new technologies, and file a long-awaited plan at the state PUC to replace the Prairie Island nuclear plant and not bypass the PUC on future energy needs planning.
"We are convinced that Minnesota's historic progress on clean energy and energy efficiency will not be slowed by the proposed merger," said Michael Noble of Minnesotans for an Energy Efficient Economy.
Allegheny + Mountaineer. Allegheny Energy subsidiary Allegheny Power signed a deal on Dec. 20 to take over Mountaineer Gas Co., a subsidiary of Energy Corp. of America, for $323 million, including assumption of $100 million in debt. The deal would give Allegheny 11.7 billion cubic feet of gas storage and 200,000 new gas customers.
Sokol _ Warren Buffett. The FERC OK'd the sale of stock of MidAmerican Energy Holdings Co. to a group of investors that would control the utility holding company as a private concern.
The group includes Berkshire Hathaway Inc. (9.9 percent voting shares and 81 percent equity interest in holding company), David Sokol (2 percent voting; less than 1 percent equity) and Walter Scott Jr. and the Scott Family Interests (88 percent voting shares and 18 percent equity in MidAmerican Energy, the utility subsidiary). Docket No. EC00-18-000, Dec. 15, 1999 89 FERC ¶62,225.
National Grid + NEES. The Nuclear Regulatory Commission on Dec. 13 OK'd the proposed merger between Great Britain's National Grid Group plc and New England Electric System, whose subsidiary, New England Power Co. owns minority interests in six nuclear power plants.
The $3.2 billion merger, expected to close