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News Digest

Fortnightly Magazine - December 2000

gas rate settlement for National Fuel Gas Corp. designed to offset anticipated higher-than-usual gas commodity costs for the winter heating season.

The settlement extends a $10 million aggregate rate credit to ratepayers and modifies the current program for sharing excess earnings with customers (on a 50-50 basis) by cutting the benchmark rate return on equity from 12 percent to 11.5 percent. Case 00-G-1495, Oct. 23, 2000 (N.Y.P.S.C.).

Vertical Disaggregation. Virginia regulators adopted rules governing the functional separation of generation, transmission and distribution services provided by electric utilities.

In so doing, it denied arguments by Virginia Power that once a utility divests all generation, the commission then loses authority to regulate purchased power costs passed through to retail distribution customers, since such default service functions merely as an assurance of available generating capacity, which is deregulated. .

Rate Freeze Legislation. Michigan ruled that the rate freeze imposed under the state's electric restructuring legislation does not bar the state's electric utilities from boosting rates to recover costs incurred to pay avoided cost rates to qualifying cogeneration facilities for purchased power. .

Return on Equity. Marking a break from past practice, Kentucky set rates reflecting return on equity measured against the utility's financial statement capitalization, rather than an original cost rate base. It called capitalization a "better measure of the real cost of providing service," especially where rate base exceeds capitalization, indicating that sources other than debt are available to finance assets. .

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