Forty percent of 42 state public utility commissions (PUCs) expect electric utilities to unbundle generation from transmission and distribution within the next one to five years, according to a survey conducted for the Electric Generation Association (EGA) by Boston Pacific Co. EGA did not indicate whether the survey went out before or after March 29, when the Federal Energy Regulatory Commission (FERC) issued its Notice of Proposed Rulemaking on transmission access and stranded investment, which of course would require functional (but not structural) unbundling of generation and transmission.

The EGA claims its survey suggests broad support for electric competition, but that market structures are not yet in place to afford a soup-to-nuts repeal of the Public Utility Regulatory Policies Act. The Edison Electric Institute disagrees. David Owens, senior v.p., says "competition is real:" "EGA is misguided in believing that because states are not looking at unbundling and wholesale transmission, that competition is not increasing."

Copies are available from EGA (202-965-1134).

Bruce W. Radford is editor of PUBLIC UTILITIES FORTNIGHTLY.

The California PUC on April 26 issued interim rules that could allow local telephone competition in the Pacific Bell and GTE-California service areas as early as June. The rules would manage competition between competitive local carriers (CLCs) and franchised local telcos.

The rules would allow CLCs to offer individual service components (such as subscriber loops, line side ports, signaling links, signal transfer points, service control points, and dedicated channel network access connections) or choose to handle the entire phone call.

Some long-distance carriers and cable television firms may also vie for local phone customers. (EM L.B.

The FERC on April 26 made final its rule whereby electric utilities may recover the cost of trading Clean Air Act emissions allowances incurred when selling power at wholesale, telling utilities they can require wholesale customers to furnish information on how the allowances will be paid for (DOCKET NO. PL95-1-001).

The purchaser must declare at the beginning whether it will pay for or replace emissions allowances. But the buyer need not replace allowances before the seller's own deadline to meet EPA allowance requirements. (EM L.B.

Texas Utilities Electric Co. (TUE) and Gulf States Utilities are looking to an April 13 Texas Supreme Court decision (involving GTE-Southwest) that said the state PUC need not employ the actual taxes paid method in setting utility rates.

Gulf States will now amend its appeal of a March 20 Texas PUC order forcing a $52.9 million rate reduction, which had included a $25.8 million actual taxes paid component.

Texas Utilities had put its faith in legislative relief, but saw its hopes dashed in late April when a Texas state senate committee defeated a proposal to take up the matter. Under the actual taxes paid method, TUE could have to pay the IRS up to $1.3 billion, and lose up to $100 million annually of accelerated tax depreciation. (EM L.B.

The Columbia Gas System, Inc., and its principal pipeline subsidiary, Columbia Gas Transmission Corp. (CGT) have filed separate reorganization plans with the U.S. Bankruptcy Court for the District of Delaware.

The parent company's plan proposes total distributions of about $3.6 billion to creditors, including $2.3 billion to pay pre-petition debt, with $1.1 billion in interest on that debt.

CGT's plan proposes a total distribution of about $3.9 billion to creditors, including about $2.2 billion to the parent company to resolve secured and unsecured claims, about $1.2 billion for producer claims, and about $300 million toward third-party claims.

John H. Croom, Columbia Gas System Chairman and CEO, predicts distributions under the two plans before the end of the year. Croom also believes the companies will emerge from bankruptcy with investment grade debt ratings. CGT claims the settlement has wide support from state regulatory commissions. (em L.B.

In two recent decisions the Dane County (Wisconsin) circuit court has affirmed state commission (PSC) jurisdiction to enforce a competitive bidding process for building new power plants.

The two cases upheld the use of system modelling and intangibles, plus an environmental impact statement (EIS). They also upheld the PSC's move to adopt a generic bidding process on a three-year experimental basis, which delays a contested case hearing until a winning bid is chosen, and delays an EIS until a specific construction proposal is selected.

According to Steve Schur, a PSC attorney, the most interesting part of the bidding process is that it is not plant- or site-specific. Schur said it allows a "robust bunch of proposals to come in," achieving the lowest cost. (em L.B.

The Virginia commission on April 20 authorized Virginia Electric and Power Co. (VP) to implement a five-year, experimental real-time pricing rate (RTP), but denied a proposal to custom-build dispersed generating facilities at customer sites.

The RTP will allow VP to set rates for large industrial customers (over 10,000 Kw) based in part on the actual hourly cost of generating electricity (Case No. PUE940080). The pilot program allows VP to experiment with market-based pricing by offering industrial users the opportunity to directly control their energy costs.

But the commission rejected VP's proposed dispersed energy facility rate (schedule DEF), finding it not specific enough to be carried out on an "experimental" basis. Moreover, the commission said that dispersed generation might actually increase costs incurred due to customer self-generation. (em L.B.

Citicorp Securities Inc. is questioning whether the New York Public Service Commission is giving fair treatment to Niagara Mohawk Inc. (Ni-MoM), compared with rate increases the PSC allowed recently for New York State Electric & Gas (NYSEG).

According to Citicorp, the PSC on April 20 blessed NYSEG with average electric rate hikes 2.9 percent in 1995, 2.8 percent in 1996, and 2.7 percent in 1997, while freezing industrial rates. In contrast, Citicorp points to what it calls a "very moderate" $36 million (1.1 percent) rate increase awarded to Ni-Mo on April 19, in which the PSC allegedly encouraged Ni-Mo to address issues such as competitive position and high-priced purchased-power contracts.

With about $50 to $60 million in annual increases for nondiscretionary purchased power costs expected for Ni-Mo through the remainder of the decade, Citicorp observed that supportive rate treatment similar to that accorded NYSEG is critical to

Ni-Mo's long-term financial health. One major difference: Ni-Mo pursued a heavily contested rate case, while NYSEG worked out a settlements. According to Citicorp, "The bad blood between NYPSC trial staff and [Ni-Mo] regulatory negotiators is now legendary." (em L.B.

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