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News Digest

Fortnightly Magazine - March 1 2001

Con Ed, but in the process explained that it did not OK the deal in that prior order, but only imposed conditions (rate relief for ratepayers) in case the merger should go forward. -B.W.R.

Power Markets

California PX. On Jan. 19, a week after it claimed that its block forwards market saved traders $1.2 billion in power costs, the California Power Exchange said it would shut down by April and shift existing power contracts to other exchanges, such the New York Mercantile Exchange and Automated Power Exchange.

Then, several days later, as if to rub salt in the wound, the FERC ruled that the PX had violated its final order on California market reform by failing to make sure that generators bidding into the PX at a price higher than the FERC's $150/MWh "break point" would receive only the amount of their bid, and that such bids would not set the market-clearing price. .

On Jan. 25, PX CEO George Sladoje had written a personal letter to FERC Chairman Curt Hébert, describing how the PX could not easily modify its software to impose the required change. The PX Board of Governors then voted to suspend its day-of- and day-ahead markets. January 31 marked the last day of trading.-B.W.R.

California Power Procurement. On Feb. 1, California Gov. Gray Davis signed into law Assembly Bill 1-X, authorizing the state's Department of Water Resources to assess the state's need for power, on consulting with the state PUC and public and private electric utilities, and then to sign contracts (including options or forwards) to purchase electricity for resale to utilities-or even directly to retail customers.-B.W.R.

Mergers & Acquisitions

ConEd + Northeast. The New Hampshire PUC voted 2-1 to allow Consolidated Edison Inc. of New York to take over Northeast Utilities (owner of Connecticut Light & Power, Yankee Gas, and Public Service Co. of New Hampshire), after receiving assurances that ConEd would not recover the $1.5 billion acquisition premium through higher rates charged by PSNH, since the state legislature earlier had barred any such rate hike as a quid pro quo for approving the utility's securitization of stranded costs. .-L.A.B.

UtiliCorp ÷Empire. On Jan. 3 UtiliCorp said it would cancel plans to merge with Empire Electric Co. Several weeks earlier Arkansas regulators had rejected the deal, while the Missouri PSC OK'd the merger but rejected a key component of UtiliCorp's regulatory plan—a five-year rate freeze. Oklahoma said it OK'd the deal only because no party objected, but it reserved the right to scrutinize the regulatory plan in future rate cases. .-B.W.R.

Electric Reliability

DOE Initiative. The U.S. Federal Trade Commission filed comments criticizing tentative plans at the Department of Energy to give mandatory status to electric reliability rules promulgated by the North American Electric Reliability Council (NERC), suggesting that NERC was becoming irrelevant.

The FTC advised the DOE to broaden its reliability proposal to include competitive institutions, and suggested that regional transmission organizations may subsume NERC functions or make the DOE inquiry redundant.

"To the extent that RTOs are implemented in all areas of the country ...