Common objections to weather hedging products include:
Rate Discount Contracts. A Kansas court upheld a state commission rate case ruling that refused to impute revenues to UtiliCorp to offset revenues lost in offering rate discount contracts to large-volume electric customers, despite arguments by a consumer group that UtiliCorp was shifting costs to build its unregulated Aquila merchant energy business, since the commission earlier had OK'd the flexible tariffs that allowed such contracts, without challenge.
Yet the court acknowledged arguments that opponents could not have fought the tariffs without actual data showing their effects, and expressed concern that state regulators had not examined possible economic effects of rate discounts when the tariffs were approved. .-B.W.R.
Ad Valorem Taxes. A Louisiana appeals court instructed a state trial court to hear a suit by a gas pipeline that attacked the state's policy of levying ad valorem taxes on 25 percent of fair market value of utility property, compared to only 15 percent of the value of nonutility property. .-B.W.R.
Property Taxes. A Kansas court ruled that while state tax assessors had used the "income," "cost," and "market" approaches to set the value of property for an interstate gas pipeline, it was unlawful to calculate the intrastate Kansas share by reference only to original cost, since state law required tax assessments to reflect fair market value. .-B.W.R.
Territorial Disputes. Reversing a state trial judge, a South Carolina appeals court barred a rural co-op from offering electric distribution service in a residential subdivision by an adjacent town, because the population of the annexed locality exceeded 2,500, and thus could not be considered as a "rural" area eligible for service from a co-op. .-B.W.R.
Mismanagement Penalties. The Vermont Supreme Court upheld a ruling by the state public service board that cut return on equity in half for Citizens Utilities-from 10.5 percent to 5.25 percent-rejecting utility claims that the penalty was confiscatory. .-B.W.R.
Nuclear Waste Fund. A federal appeals court allowed a group of nuclear electric utilities to go forward with a suit asking not for money damages, but for an injunction, a declaratory judgment, and prospective equitable relief from obligations under the Energy Policy Act of 1992 to pay a share of costs incurred by the Department of Energy for decontaminating and decommissioning certain uranium processing facilities. .-P.C.
Review of Contracts. A federal appeals court overturned a ruling by the FERC that had reformed a contract for sale of output from the Pilgrim nuclear plant, saying that regulators cannot remake the return on equity set by contract even if the rate appears unreasonable in light of current capital costs. The court accused the FERC of becoming "hostile" to the Mobile-Sierra doctrine, which limits the right of regulators to reform contracts they see as unfair. .-P.C.
Municipal Utilities. The Ohio Supreme Court ruled that municipalities may not buy electricity solely for resale to customers outside city lines (in this case, a large industrial plant), but may sell only the surplus power left over in serving city residents. -P.C.
Electric Cooperatives. The Virginia, Maryland, and Delaware Association of Electric Cooperatives