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News Digest

Fortnightly Magazine - March 1 2001

from increased demand and age of the units (boiler tube and seal leaks, turbine blade wear, and valve and pump motor failures, etc.), and did not contribute to power price movements in California.

"Rather," said the FERC staffers, "it appears that these companies accelerated maintenance and incurred additional expense to accommodate the ISO's operating needs. They also reduced outages and deferred maintenance in December and preserved revenue opportunities by doing so."

The report emphasized that it was not designed to determine whether the companies were withholding capacity from the market by refusing to bid or schedule plant capacity, or by submitting overambitious bids. . -B.W.R.

Courts

Local Facility Access. The U.S. Supreme Court agreed to review the so-called "TELRIC" method (Total Element Long-Run Incremental Cost) adopted by the Federal Communications Commission to estimate reproduction cost and thus set prices for competitive carriers that lease essential local exchange facilities from incumbent local telephone monopolies.

Under this method, the FCC has argued that lease prices should not reflect all historic embedded costs, but only those forward-looking costs (a smaller figure) that an incumbent carrier would likely incur to construct an efficient local exchange network using current technology. . -B.W.R.

Utility Pole Attachments. The U.S. Supreme Court has also agreed to review whether federal statutes and rules-set by the FCC-governing compensation for attachments to utility poles should apply to attachments for wireless communications or for cable TV systems used simultaneously to provide high-speed Internet access. . -B.W.R.

Stranded Costs. The New Hampshire Supreme Court denied an appeal by two consumer advocacy groups challenging recovery of stranded costs by Public Service Co. of New Hampshire as an unconstitutional taking of property.

It acknowledged that past investments in generation plants may no longer be "used and useful," but said the "used and useful doctrine" was not a constitutional requirement in rate-making policy. .-L.A.B.

Water Utility Financing. In a case involving a water utility lease transaction reported to be the first of its kind in the U.S., the Massachusetts Supreme Court upheld a state PUC order that had set water utility return on equity at 14 percent for new plant construction and that OK'd a financing arrangement whereby the utility would lease a water treatment plant from a sister corporation over a 40-year term, but with lease payments treated by the water utility as annual operating expenses and calculated to allow the affiliate (lessor) to recover plant costs over a period shorter than the plant's projected useful life. . -P.C.

Mergers & Acquisitions

Bangor + Emera. The FERC OK'd the $206 million merger of Bangor Hydro-Electric Co. and Emera Inc., parent company of Nova Scotia Power Inc., and the owner of a 12.5 percent interest in the Maritimes & Northeast Pipeline. .

The Maine PUC had OK'd the deal a month earlier, on the condition that consumers would not pay higher rates to recover the acquisition premium. . -L.A.B.

Northeast + ConEd. The New Hampshire PUC denied a request to conduct a full antitrust analysis on rehearing of its Dec. 6 order on merger of Northeast Utilities and