News Digest was compiled by Carl J. Levesque, editorial assistant, Lori A. Burkhart, contributing legal editor, and Bruce W. Radford, editor. For continual news updates, see...
allow the gas company to construct a pipeline to serve Calpine Corp.'s now-under construction, 540-MW gas-fired power plant. .
Fuel Procurement. The Iowa board initiated a rulemaking to replace the board's annual evaluation of electric utility contracting practices and fuel procurement. Under the proposal, it would notify utilities each year by Jan. 31 on whether they must file a fuel procurement plan, which would be due by May 15. Comments were due March 28. .
Gas Retail Choice. The Florida PSC adopted a rule allowing small businesses to choose their natural gas supplier (an option previously available only to large industrial consumers), and also allowing gas utilities (at their discretion) to offer choice to residential customers.
The rule directs all investor-owned gas utilities to offer transportation service to all nonresidential customers and eliminates volume thresholds ranging from 100,000 to 500,000 therms per year that had governed customer eligibility.
The PSC established base line requirements for each utility's open access tariff, but imposed minimal requirements so that each utility can tailor its tariff to its individual needs. Each tariff must clearly specify that the utility providing transportation service is not responsible for providing the customers with natural gas if the customer's supplier fails to produce. .
Performance-Based Rates. Kentucky Utilities and LG&E have agreed to implement an earnings shared mechanism (ESM) suggested in January by the Kentucky PSC allowing the utilities to keep 100 percent of their earnings up to 12.5 percent return on equity, with any earnings above that ROE shared with shareholders (60 percent) and ratepayers (40 percent). If company profits go below a 10.5 percent ROE, customer rates would increase to account for 40 percent of the loss.
In response to the orders, which impose a $63 million annual revenue reduction ($36.4 million for KU and $27.2 million for LG&E) representing more than 20 percent of the utilities' combined income, Duff & Phelps Credit Ratings Co. has downgraded the credit ratings of both utilities and imposed a negative rating outlook.
Stranded Costs. The Texas PUC tentatively approved a settlement allowing Central and South West Corp.'s subsidiary, Central Power & Light Co., to securitize about $764 million in stranded costs, short of the $1.27 billion CPL had requested in October 1999.
The settlement calls for the securitized amount to be reduced to $764 million in regulatory assets plus other qualified costs estimated at $28 million, and for $290 million of the regulatory assets originally requested to be securitized to be included in the calculation of stranded costs in CPL's April 2000 transmission and distribution cost filing. The PUC would issue a final determination on stranded costs in 2004..
Utility Marketing Affiliates. The Kentucky PSC adopted a code of conduct to govern sharing of information and resources between investor-owned utilities and their unregulated affiliates. .
LDC-Marketer Relationship. The Michigan PSC adopted a set of standards to regulate dealings between Michigan Gas Utilities (a regulated gas utility) and marketers, whether or not affiliated, but rejected a proposal to require the utility to conduct all unregulated marketing activities through a separate corporation. .