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News Digest

Fortnightly Magazine - February 15 2000

a federal appeals court struck down a 1995 Wyoming law that sought to improve local phone service in rural areas by protecting small rural carriers from competition for 10 years to allow them to build new infrastructure. RT Communications Inc. v. FCC, Nos. 98-9541 et al., Jan. 13, 2000 (10th Cir.).

Directory Publishing. A Utah court upheld a commission order that imputed revenues from a directory publishing affiliate to the local telephone carrier in setting local rates. It said that ratepayers had a stake in publishing operations. US West Communications Inc. v. Utah PSC, No. 980082, Jan. 7, 2000 (Utah).

Gas Valve Safety. A California appeals court reversed a trial order and refused to dismiss a complaint by a natural gas customer who alleged that Pacific Gas & Electric Co. committed fraud by first charging ratepayers $18 million a year under a seven-year program to replace 2 million faulty gas valves, and then cutting back on the program by secretly deciding to replace valves only when a repairman was sent to the customer premises on another call.

The court agreed with PG&E that the PUC had primary jurisdiction, but said that a fine or other sanction was not barred by the filed-rate doctrine or the rule against retroactive rate making.

It stayed the fraud suit to wait for the PUC to handle a separate complaint filed by different plaintiffs seeking a fine against PG&E for an apartment explosion and fire allegedly caused by faulty gas valves. Wise v. PG&E, A083784, Dec. 29, 1999 (Calif. App., 1st Dist., Div. 5).

Propane Gas Service. A Wisconsin court upheld a contract between the owner of a mobile home park and a propane gas distributor that had required all park tenants that used propane or natural gas to purchase their gas only from the distributor. It found no conflict with utility franchises or public policy. Northern States Power Co. v. National Gas Co. Inc. No. 99-1486, Dec. 30, 1999 (Wisc.App.).

Gas Pipelines

New Distribution Systems. Sempra Energy, parent company of Southern California Gas Co. and San Diego Gas & Electric, has won a contract from the government of Nova Scotia to build and operate the largest new North American natural gas distribution system built in the past 30 years (and the first natural gas system on the island). A 20-year rate plan (with a 25-year franchise right) OK'd for the subsidiary, Sempra Atlantic Gas, assumes a return on equity significantly higher than normally allowed by U.S. regulators.

Sempra Atlantic Gas says it will spend $700 million over the next seven years to build the system, making natural gas available to 78 percent of the 350,000 households in the province.

Independence Projects. The FERC, by a 3-2 vote on an interim order, found no adequate showing of market need for the controversial Independence and ANR SupplyLink gas pipeline projects, putting construction on hold.

But while the unusual order does not grant certificates, it states that if the companies demonstrate they have contracts for 35 percent of total capacity with non-affiliates, the FERC may approve the projects, along