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News Digest

Transmission & ISOs
Fortnightly Magazine - June 1 2000

charges and shopping credits, which were set initially to reflect assumptions regarding energy usage.

Penn Future cites the service territory of PECO, where the higher-than-projected electricity usage led to higher-than-expected stranded cost recovery. There, the 1999 settlement forecast for stranded cost recovery was $577.4 million, but the actual number came in at $599.3 million. Meanwhile, usage rates in 1999 for PECO's residential and commercial classes rose by 7 percent and 10 percent, respectively.

By contrast, Penn Future says that the Allegheny service territory had zero usage growth. Call 1-800-321-7775.


Power Plants

Merchant Generation. In a ruling that rocked independent power producers, the Florida Supreme Court held essentially that private power producers from out of state cannot build merchant generating plants in Florida and then sell the output in the open market.

The court reached that result by finding that, before building, a merchant generator must first prove "need," which to the court meant proof that an electric utility regulated in Florida (having a duty to serve Florida consumers) would have a committed need for all of the power output from the merchant plant. Furthermore, the court said that the projected need of unspecified utilities throughout the peninsula "is not among the authorized statutory criteria" for granting determinations of need.

The court's 6-1 vote reversed a state commission ruling (also on a divided vote) that had OK'd construction of a 514-mw gas-fired plant proposed to be built by partners Duke Energy and the municipal electric utility of New Smyrna Beach. The court stressed that electric utility policy in Florida still originates with the state legislature, which has not yet enacted a bill on electric restructuring or retail choice.

Justice Harry Lee Anstead sided with the PSC majority. He declared, "Clearly, the Commission was created to regulate utilities seeking to operate in Florida. In my view that is precisely what the Commission is doing here."

Stranded Costs. In the first such complaint filed at the FERC in the new year, Montana Power will seek to recover $23.8 million in wholesale stranded costs from two rural electric cooperatives (Big Horn County and Central Montana), saying it had a reasonable expectation to continue to supply wholesale power to the two co-ops at least as recently as 1995.

It claimed that at a meeting in March 1992, representatives of Central Montana reportedly had said they had "no interest in switching suppliers," even if open transmission were available.

Leaseback Rights. The California Power Exchange and the Nevada Attorney General and PUC filed protests at the FERC against a plan by Nevada Power to sign "transition purchased power contracts" (TPPCs) to retain rights to the output of its generating plants after they are sold off (and with prices capped at cost), so the company can obtain energy and ancillary services to perform as supplier of last resort, as required under state law.

The PX complained that the proposed TPPCs would "impede Western power markets" by preventing the new owners of the divested power plants from selling into the PX markets for energy and ancillary services. The PX added