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News Digest

Fortnightly Magazine - November 1 2000

leave standard service customers completely exposed to short-term market volatility.

"A blend of market sources for the standard service package should provide a fixed-price offer over some fixed period," the PSC said, specifying that a yearly rate, a seasonal rate, or an annual schedule of monthly rates may be acceptable.

The PSC also refrained from approving any specific measures to prevent gaming by customers who switch back and forth between services. It said it was more concerned that customers might hesitate "to go shopping if they know they may [have to] pay a higher price when they return," it said. .

PX Price Passthroughs. Citing a lack of evidence that the delay resulted in "economic or competitive harm," the California PUC declined to penalize Pacific Gas & Electric Co. for not implementing a previously approved weekly averaging method in calculating the California Power Exchange price for direct access customers.

PG&E had attributed problems with its customer information system to computer upgrade—a matter also under recent investigation by the PUC. .


Studies & Reports

Gas Price Shocks. A "continent-wide response" by industry and government will be needed to address the current natural gas price "shock" and meet the nation's long-term energy supply needs, according to Daniel Yergin, chairman of Cambridge Energy Research Associates, speaking at the Governors' Natural Gas Summit in Columbus, Ohio.

By most utility estimates, the gas shock will force bills higher this winter by 20 percent to 40 percent for residential heating, and from 50 percent to 100 percent for industrial gas use. Yet Yergin distinguished the current "shock" from a bona fide "crisis."

"The resource base in North America remains vast," he noted. "Supply development over the last few years has slowed in response to oil and gas price declines in 1998-99 and the sharp contraction in capital expenditures needed for exploration and production,"

Yergin said, adding that production eventually will increase, but it will take time for "the iron law of lead times" to take effect. Yergin added, however, that at the same time that gas production capability in the United States is down some 7 percent since 1997, demand for natural gas is at record highs—due largely to the proliferation of natural gas-fueled electric generation turbines.

Load Management. Investor-owned utilities in 1998 spent more than $376 million on load management, according to a study, "Load Management Benchmarking," released by the Edison Electric Institute. The study identifies 27 gigawatts of load reduction potential as of 1998, equivalent to 54 power plants rated at 500 MW each.

"This study confirms that shareholder-owned electric utilities recognize that it makes good business sense to invest in programs that help our customers manage—and potentially reduce—their peak load usage on the system," said Michael McGrath, EEI group director, energy services. Contact Dan Riedinger, 202-508-5483.

Retail Generation Markets. Competitive retail generation markets in the United States are worth $4 billion annually in eight states with electric choice, with the largest markets in California and Pennsylvania (over $1 billion each), according to estimates from Retail Energy Foresight, a new publication from XENERGY. (Other states