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News Digest

Fortnightly Magazine - January 1 2001

of its franchise for lack of service. .

Gas System Outages. Citing potential harm to customers, Wyoming declined to fine K N Energy for a "series of preventable human errors" that regulators said had represented "grossly negligent and unjustifiable conduct" and had led to a total failure of the utility's retail gas distribution network for some 10,000 retail customers (business and residential) in the city of Laramie, back on July 18. Instead, the commission told K N to make improvements and supply numerous followup reports, and denied rate recovery of expenses incurred by the company (about $317,000) to shut down and relight the system during the emergency. .

QF Cost Recovery. Montana denied a request by Montana Power Co. to boost the generation component of rates to recover higher purchased power prices paid to qualifying cogeneration facilities, saying the utility failed to make the requisite showing of "irreparable financial harm," as required to earn an exception from the rate moratorium imposed under the state's electric restructuring legislation that froze rates to levels in place on July 1, 1998. . —L.A.B.

Public Benefits Programs. New Hampshire issued instructions for designing, evaluating, and funding public purpose programs for electric utilities and customers:

  • Low-Income Assistance. Rejected a flat rate discount in favor of fluctuating payments designed to cut electric bills to 6 percent and 4 percent of income, respectively, for heating and non-heating customers. .
  • Energy Efficiency. OK'd a cost-benefit test with a 15 percent adder for nonquantifiable environmental benefits, and told electric utilities to develop PAYS programs ("Pay As You Save"), with program funding costs repaid out of bill savings, so as to eliminate up-front costs or split incentives. .
  • System Benefits Charge. Allocated revenues from the 2-mill system benefit charge on a 60-40 basis between two types of public benefit programs-i.e., $0.0012 per kilowatt-hour for low-income assistance, and $0.0008 per kilowatt-hour for energy/conservation programs. .

Single-Retailer Tariff. New York OK'd a single-retailer natural gas tariff for Rochester Gas & Elec. Corp., whereby RG&E will act as a wholesaler only, providing distribution service at wholesale to unregulated retail marketers, who in turn will repackage the distribution service with the gas commodity to retail gas customers, who will look to the unregulated marketer for all billing and merchant functions. .

Securitization Bonds. Regulators in Michigan and Connecticut authorized Detroit Edison, Consumers Energy, and Connecticut Light & Power to issue bonds to securitize stranded and regulatory assets.

  • OK's bonds to finance $1.8 billion of regulatory assets, with a surcharge of $0.004239 per kilowatt-hour to recover the assets. .
  • OK's bonds to finance $468.5 million in regulatory assets, with finance surcharge of $0.0025 per kilowatt-hour to recover the assets. .
  • OK's rate reduction bonds to securitize some $1.5 billion in regulatory and stranded assets. . —L.A.B.

Stranded Costs. In an open meeting held Nov. 1, the Texas PUC suggested that electric utility ratepayers should be allowed to benefit in some way if electric utilities in the state might end up with "negative" stranded costs (assets worth more than book value), even though state law does not allow