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News Digest (July 15, 2001)

Fortnightly Magazine - July 15 2001

2001. -B.W.R.

Courts

Stranded Costs. Citing a need for "finality," the Montana Supreme Court upheld a state PSC order that rejected a proposal by Montana Power to set up a cost tracker formula that would last as long as 25 to 30 years to calculate precisely the amount of unavoidable stranded costs resulting under a 1997 state law mandating retail electric choice. Montana Pwr. Co. v. Montana PSC, No. 00-412, June 12, 2001 (Mont.). -B.W.R.

Stranded Costs. A Texas court upheld state PUC orders allowing electric utilities to securitize stranded costs, rejecting claims by a competitive energy retailer that the program was unlawful since it would burden utility customers with non-bypassable costs unrelated to the cost of electricity. TXU Electric Co. v. Tex. PUC, No. 00-0936, June 6, 2001 (Tex.). -P.C.

Hydro License Conditions. A federal appeals court upheld a FERC order that declined to force a hydro plant licensee to adopt fish protection measures (courts generally won't review agency discretion not to prosecute) but at the same time said the FERC erred by ruling that fish protection was better considered through a future re-licensing case than by collaboration with the current licensee. Friends of the Cowlitz v. FERC, No. 99-70373, June 14, 2001 (9th Cir.) .-B.W.R.

Avoided Billing Costs. An Illinois court upheld a 50-cent customer credit on electric utility bills OK'd by state regulators to reflect costs saved by allowing the competitive energy retailer to send out bills under a single-billing option.

Regulators fixed the credit by dividing total embedded billing costs by the number of direct-access customers, but the utility had claimed that in reality it would avoid only 20 cents per customer under the single-bill plan. Cmwlth Ed. Co. v. Illinois Commerce Comm'n, Nos. 2-00- 0375 et al. June 6, 2001 (Ill.App., 2d Dist.). -B.W.R.

NOx SIP Calls. Federal courts in two circuits ruled on how the Environmental Protection Agency (EPA) should account for future economic growth in regulating state implementation plans (SIPs) to mitigate emissions of nitrogen oxide (NO x) contributing to non-attainment of ozone standards in downwind states.

  • The D.C. Circuit told the EPA to reconsider growth in electric generating output in setting state-specific emissions budgets where EPA growth models created "seemingly implausible" results, such as a negative growth forecast for some states in the current decade. Appalachian Pwr. Co. v. EPA, Nos. 99-1270 et al., June 8, 2001 (D.C.Cir.).
  • The Eighth Circuit said the EPA need not account for emissions growth a nticipated or actually occurring during the lag period between the due date and filing date of the SIP. Sierra Club v. EPA, No. 00-2744, June 6, 2001 (8th Cir.).-B.W.R.

Mergers and Acquisitions

Ni-Mo + National Grid. The FERC OK'd a $383 million acquisition premium in the acquisition of Niagara Mohawk Holdings Inc. by United Kingdom's National Grid USA, with 90 percent of the premium "pushed down" to Ni-Mo's books. Docket No. EC01-63-000, 95 FERC ¶ 61,381, June 13, 2001. -L.A.B.

GPU + FirstEnergy. The Pennsylvania PUC OK'd a settlement resolving certain rate issues for the merger of GPU and FirstEnergy, allowing