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News Digest

Fortnightly Magazine - August 2000

and produce its own reactive power. It explained the FERC's argument was inconsistent with a 1997 ruling involving American Electric Power .

The court also allowed recovery of "heat loss costs" in the reactive power charge, though the FERC had objected that such costs would be double-counted, as they were already recovered in a fuel cost adjustment clause.

Electric Stranded Costs. Affirming a FERC order, a federal appeals court denied authority to a Vermont electric utility to recover wholesale stranded costs after it lost revenues for selling power to its subsidiary in a wholesale requirements contract, because the New Hampshire PUC had forced the subsidiary to give up the contract so that the subsidiary's retail customers in New Hampshire could shop for power from competitors.

Return on Equity. In affirming a FERC order setting return on equity for interstate gas pipeline Williams Natural Gas Co. (a subsidiary of The Williams Companies), an appeals court rejected claims by state regulators and customers in Missouri and Kansas and said that the FERC was not required to reduce the equity ratio in the pipeline's capital structure (in a "double leverage" adjustment) to reflect parent company debt.

As the court explained, "It is not for us to say whether these arguments have put the kibosh on the double leverage theory. We can, however, say that the PSC's quick response-[that] individual investors would never directly own a FERC-regulated pipeline, and if they did, they would not stand for such high equity ratios-is not a serious intellectual answer." Missouri PSC v. FERC, No. 99-1169, June 27, 2000 (D.C.Cir.).

Hydro Relicensing. In affirming a FERC order that renewed a license for the Penobscot Mills hydroelectric project in Maine, a federal appeals court agreed that the commission could treat existing conditions at the project site (with the project in place) as the baseline "no action option" in evaluating various alternative outcomes.

Power Outages. In allowing a class action suit to proceed in court on whether GPU was liable for damages for power outages, a state appeals court denied arguments by the utility to send the case instead to the state utility commission. The court noted that the commission was conducting its own case on reliability questions and that, contrary to assertions by GPU, the case turned more on questions of negligence than interpretation of commission regulations.

QF Certification. Saying the case should have been filed at the FERC, a federal district judge dismissed an electric utility lawsuit seeking damages against a power producer for breach of contract, plus a declaratory judgment that the power producer should lose its status as a qualifying cogeneration facility.

Water Hookup Fees. The South Carolina Supreme Court ruled that a county water and sewer district could impose residential connection fees to pay for system upgrades in an older subdivision, rejecting arguments that such fees could be assessed only through a tax because of the general nature of the public benefits.

Business Wire

Gas Technology Institute (GTI) is the new corporate name of the merged GRI and Institute of Gas Technology.

"Our focus is still on