Mergers & Acquisitions
Joint Ventures. The Federal Trade Commission, in consultation with the Antitrust Division of the U.S. Department of Justice, issued draft antitrust...
- of their own competitive interests." National Grid argued that TO participation jointly with the ISO would "in no way hinder" others from proposing their own projects.
- NEPOOL attacked language in the FERC order, saying it could be read to suggest that the ISO now would assume authority for bringing tariffs and market rules into compliance with the new congestion system. NEPOOL argued that despite its past problems in decision making (some actions require a two-thirds vote of its members) it is the only agency that can amend its own agreements and tariffs. Docket Nos. EL00-62-000, et al., 91 FERC 61,311, June 28, 2000, petitions for rehearing filed July 28, 2000.
Return on Equity. Citing "significant differences" between electric utilities and interstate natural gas pipelines, the FERC OK'd an 11.6 percent return on equity (ROE) for Southern California Edison Co. for electric transmission service provided over lines under the control of the California ISO, rejecting the 9.8 percent return rate set earlier for SoCal Ed by an administrative law judge.
The FERC said it would use a "constant growth" variation of the traditional discounted cash flow (DCF) method to set ROE for the electric transmission business. By contrast, the ALJ had adopted the same method used for gas pipelines, with a two-stage model of dividend growth that assumes that long-term growth at pipelines will mirror the gross domestic product. The FERC explained that ongoing industry restructuring puts the transmission business in a different category from pipelines, as electrics feature higher payout ratios, meaning less growth. (SoCal Ed's ratio was 55.38 percent.)
"This distinction is critical," said the FERC, "because retained earnings are a key source of dividend growth." It added that Prudential Securities treats electric utilities differently from all other industrial companies when estimating growth rates, even though it does rely on GDP data to judge long-term growth for gas pipelines. .
OASIS and RTOs. In spite of Commissioner Curt Hébert calling the initiative "a waste of time," the FERC issued an advance notice of proposed rulemaking seeking detailed proposals by Feb. 15 for certain communications protocols and standards to implement open access same-time information systems (OASIS) phase II.
OASIS phase II will incorporate electronic scheduling and apply to the communications and related business practices between customers and transmission providers, including regional transmission organizations.
Commissioner William Massey said the FERC had opened the case to help OASIS nodes evolve into RTOs, and that it wants a "common look and feel" to OASIS websites. Hébert, though voting for the order, said that Order No. 2000 already applied OASIS to RTOs. Docket No. RM00-10-000, 92 FERC 61,407, July 14, 2000 (F.E.R.C.).
Independence/SupplyLink. The FERC granted certificates to Independence Pipeline and ANR Pipeline Co.'s SupplyLink Project, after the two companies filed precedent agreements to meet the requirement that they each have contracts with nonaffiliated shippers for at least 35 percent of proposed capacity. Before construction may begin, however, the companies must submit firm agreements with no "out" clauses. .
The Midwest Independent Transmission System Operator Inc. has signed a contract with