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News Digest

State PUCs
Fortnightly Magazine - May 1 2000

sulfur dioxide allowances, generating proceeds of over $25 million, to be returned to utilities in proportion to allowances withheld.

In the spot auction, American Electric Power purchased the most allowances, buying 60,000 (46.73 percent of total allowances) for $7.97 million, followed by Enron North America, which bought 19,850 (15.46 percent) for $2.55 million. AEP also led all other energy companies in the seven-year advance auction, buying up 109,776 allowances (87.82 percent) for $7.5 million. Each allowance authorizes a power plant to emit 1 ton of SO2 in a designated year or any year thereafter. For complete results, see www.epa.gov/acidrain/auctions/aucmain.html.

Auction Sale Proceeds. The New York PSC modified a proposal by Orange and Rockland Utilities for distributing the gain on the sale of its generation assets by requiring the company to set aside a portion of the gain for programs aimed at "competitive enhancement."

The PSC also allowed O&R to recover certain load pocket mitigation costs (call option payments) through its energy cost adjustment mechanism rather than through a deduction from the divestiture proceeds.

NOx Reductions. The Wisconsin PSC approved a plan by the state's electric utilities to spend approximately $950 million to reduce nitrogen oxide emissions from their generating plants in order to meet federal goals for emissions reduction mandated by the Clean Air Act and the Environmental Protection Agency.

The PSC will allow each investor-owned utility to propose a method for disclosing NOx compliance costs and recovering them in base rates, rather than through a surcharge.

It declined to allow depreciation of such costs, explaining that "the useful life of NOx controls remains uncertain." The PSC added that depreciation could cause the utilities to lose a significant amount of revenue if the controls become "prematurely obsolete."

Colstrip Sales Price. Expressing "serious concerns" about whether the $230.4 million sale price represented fair market value, the Oregon PUC denied Portland General Electric Co.'s application to sell its 20 percent interest in the Colstrip generating units 3 and 4 to PP&L Global.

The PUC noted that PUC staff analysis showed ratepayers would suffer a $71.3 million loss from Colstrip's sale over the remaining 26-year life of the plant.

Centralia Sales Proceeds. The Wyoming and Oregon commissions approved the sale by PacifiCorp of its 47.5 percent interest in the Centralia plant, and its 47.5 percent interest in the Centralia mine to TECWA Power and TECWA Fuel, respectively, both subsidiaries of TransAlta Energy Corp., but the two PUCs disagreed on a method to allocate the gain from the sale of the 1,340-MW coal-fired plant. Idaho differed as well in reviewing Avista Corp.'s sale of its 17.5 percent interest.

  • . OK'd PacifiCorp's proposed use of a depreciation reserve method, where the total net gain is shared among its retail jurisdictions and between customers and shareholders. The method delineates the percentage of capital costs recovered through customer rates and the percentage of such costs that remain on the company's books.
  • . Found "no nexus between the proportion of the book value that has been depreciated and the proportion of the gain that should go to customers." Instead,