A case study shows how today's typical tariffs can force some industrial electric customers to subsidize others.
There ought to be a better way for electric utilities to set prices for...
by injecting gas back into storage in the winter, the normal season for withdrawals.
- Seasonal Flexibility. Many shippers complained unsuccessfully that if the FERC should allow the unconventional reverse service, then it should at least reconsider terms and rates for conventional storage, including restrictions that limit flexibility for timing of conventional injections and withdrawals, but the FERC refused to entertain changes in terms and conditions of collateral tariffs.
- Subsidies. The FERC also denied arguments that shippers taking conventional storage would subsidize the reverse flow service, since the tariff proposed to recover only 80 percent of costs.
- Free Riders. The FERC also denied Dynegy's counterintuitive argument that if the FERC did restructure conventional storage to make it more flexible, then LDCs serving electric generators located off of NGA's system would get a free ride, as they could then use the more flexible services to supply their gen plant customers, while shippers serving gen plants on the NGA system would be forced to subscribe to the reverse-flow storage tariff, and would pay higher net charges. .
Market Power. The FERC authorized Petal Gas Storage LLC to construct and operate certain storage facilities near Hattiesburg, Miss., finding no untoward market concentration and no reason to withdraw authority for market-based pricing despite the firm's acquisition by El Paso Energy. .
PBR Plans. Massachusetts proposed service quality standards for performance-based rate (PBR) plans for the state's electric distribution utilities, with separate company-specific benchmarks, based on 10-year average SAIDI (System Average Interruption Duration Index) data for each company.
Regulators said performance varied too much among utilities to warrant use of nationally recognized standards for SAIDI or SAIFI (System Average Interruption Frequency Index).
It decided not to assess penalties for power quality performance (short-term or momentary outages and voltage surges), citing a lack of reliable data, but did tell utilities to collect data to measure MAIDI (Momentary Average Interruption Frequency Index). .
System Improvement Strategies. Wisconsin Energy Corp. has announced a decade-long, $6 billion plan to construct new power plants, refurbish or retire older plants, improve reliability by upgrading its distribution system, and reduce common stock dividends to fund growth. WEC estimates that by 2010, power demand in the state will outstrip capacity by approximately 4,000 megawatts.
Mergers & Acquisitions
Sierra + Portland. The Oregon PUC staff, Sierra Pacific Resources, and industrial customers and consumer advocate groups reached a settlement paving the way for Sierra Pacific to acquire Portland General Electric-a takeover already OK'd by the U.S. Dept. of Justice, Federal Trade Commission, and Securities and Exchange Commission. The deal calls for a six-year freeze on certain electricity prices and a $95 million price credit for PGE customers over seven years. .
Citizens<> Kauai. The Hawaii PUC blocked efforts by Citizens Communications Co. (formerly Citizens Utilities Co.) to exit the electric industry and focus solely on its telecommunications business. It denied approval to Citizens to sell its Kauai Electric Division (KED) to Kauai Island Utility Co-op, as it ruled that the co-op would barely meet coverage standards for debt service and "is not financially fit