Federal Agencies
Nuclear Plant Fines. The Nuclear Regulatory Commis-
sion has proposed fines totaling $2.1 million against Northeast Nuclear Energy Co. for many violations at the company's Millstone nuclear plant in Waterford, Conn. The fine marks the largest civil penalty ever proposed by the NRC. Northeast Utilities said it will pay the fine, which it called "a necessary and important step toward bringing to closure a very disappointing and difficult chapter in the company's history." The utility said it will not pass the cost onto ratepayers.
Electric Futures. The New York Mercantile Exchange has
submitted to the Commodity Futures Trading Commission three electric futures and options contracts based on delivery in the eastern United States. The three delivery sites are: the Pennsylvania-New Jersey-Maryland transmission system, the Cinergy transmission system (Ohio); and the Entergy transmission system (Louisiana).
Power Pools & Reliability
ISO Proposal. Eleven investor-owned electric utilities on
Dec. 9, 1997 agreed to explore creation of an independent system operator. Participating utilities are: Consumers Energy, Detroit Edison, Duquesne Light Co., The Cleveland Electric Illuminating Co., Ohio Edison, Pennsylvania Power, Toledo Edison, Virginia Power and the Allegheny Power Companies. The companies serve 26 million customers in Maryland, Michigan, Ohio, Pennsylvania, West Virginia and Virginia. They own 30,000 miles of transmission lines, representing an investment of about $6 billion. The group has hired National Grid Co., to help participants find common ground on issues such as governance and pricing.
Transmission Systems. The Western Systems Coordinating Council on Dec. 10 decided to move forward with a proposed WSCC Reliability Management System: a set of mandatory electric transmission system operating rules applied equally to all market participants and administered nondiscriminatorily as the industry is restructured. It includes sanctions for noncompliance.
Courts
Customer Exit Fees. The Oklahoma Supreme Court struck down an Oklahoma Corporation Commission rule fixing how much money a new utility supplier must pay the old supplier when a customer exits its system. The commission's Rule 60 required that the new supplier pay the replaced utility an exit fee equal to three years of that customer's electric costs, and the acquiring utility must purchase all equipment needed to supply that customer. Public Service Co. of Okla. v. Okla. et al., No. 89,340, Nov. 25, 1997, 1997 wl 728109 (Okla.).
Canadian Natural Gas Piplines. North Atlantic Pipeline
Partners was unable to convince the Federal Courts of Canada to force the National Energy Board to consider its plan to build an undersea pipeline. North Atlantic also lost its fight against a recommendation by a federal-provincial panel to allow a rival company, Maritimes & Northeast, to build a similar pipeline to deliver natural gas to New England and Atlantic Canada.
Studies & Reports
Municipal Credit Ratings. In a new report, Moody's
Investors Service said electric deregulation may have long-term negative credit-rating implications for some municipalities, counties, school districts and almost 30 states. In Electric Industry Deregulation Puts Negative Pressure on Credit Ratings of Some Local Municipal Bond Issuers, Moody's focused on power plant closings, utility property tax appeals, reductions in general fund transfers, and changes in local and state government tax policy. The report explained that deregulation has already affected several municipalities which depend on tax revenue from investor-owned utilities owning nuclear plants, and in once instance, an oil- and gas-fired generating plant.
R&D Portfolios. The President's Committee of Advisors
on Science and Technology released a report that reviewed the current national energy R&D portfolio. Federal Energy Research and Development for the Challenges of the Twenty-First Century noted that the country needs to improve energy technologies, emphasizing a need for more R&D to reduce carbon-dioxide emissions and oil exports.
State PUCs
PECO Rate Plan. The Pennsylvania PUC approved a restructuring plan for PECO Energy Co., rejecting both (1) a proposal by Enron naming itself as the default provider of electric power for all PECO customers and (2) a partial settlement plan signed by the utility and many other parties. Unlike the settlement proposal, which would have guaranteed consumers a 7-percent rate reduction for 28 months, the new PUC plan relies on competition to reduce rates, with no guaranteed savings. The commission estimated, however, that the average electric user initially will save 15 percent. Under the plan, one-third of PECO's customers will have choice of suppliers by Jan. 1, 1999, with all customers eligible by 2000. PECO will be allowed to collect $5.5 billion in stranded costs over an 8.5 year period through a separate "competitive transition charge" applied to all users of PECO's distribution and transmission system. Docket Nos. r-00973953 and p-00971265, Dec. 11, 1997 (Pa.P.U.C.).
Slamming Rules. New York directed electric utilities parti-
cipating in a new retail access pilot program to institute procedures to guard against slamming (em switching a customer's energy supplier without permission. The PSC also ruled that the utilities must implement specific customer notification and verification rules. Case 96-e-0948, Sept. 18, 1997 (N.Y.P.S.C.).
Natural Gas Rates. The Indiana Utility Regulatory Commission approved a new natural gas alternative regulatory plan for Northern Indiana Public Service Co. The performance-based rate mechanism is coupled with a retail-access program to allow up to 20 percent of the company's gas customers to choose another supplier. Re Northern Ind. Pub. Serv. Co., December 29, 1997, Case No. 40342, Oct. 8, 1997 (Ind.U.R.C.).
Retail Electric Choice. The Maryland commission
ordered a two-year phase-in of retail competition in the state's electric industry, beginning April 1999. While the commission had rejected retail wheeling in a 1995, it said retail competition will provide greater benefits to consumers than wholesale competition alone. Nevertheless, the commission convened a statewide roundtable to develop price-protective measures to insulate consumers during the transition to competition. It also ruled that the state's electric utilities will be given the opportunity to recover prudently incurred stranded costs. Case No. 8738, Order No. 73834, Dec. 3, 1997 (Md.P.S.C.).
Green Pricing. The New Mexico PUC approved a proposal by Public Service of New Mexico to purchase power from a proposed 100-megawatt gas-fired turbine generator. In return, the utility agreed to participate in the Department of Energy's Global Climate Challenge program, to purchase 5 MW of solar power generation resources and to develop a cost analysis for wind power to include in a green-power pricing tariff. Case No. 2740, Sept. 30, 1997 (N.M.P.U.C.).
Fuel Supply Hedging. The Maine commission extended an earlier ruling permitting Bangor Hydro-Electric Co. to enter price-hedge agreements for both natural gas and oil supply requirements. The new authorization runs through Feb. 29, 2000, to coincide with the scheduled initiation of retail competition in the state on March 1 of the same year. Docket No. 97-738, Oct. 14, 1997 (Me.P.U.C.).
Water Ratemaking Issues. The Pennsylvania PUC approved a controversial long-term incentive rate contract that Consumers Pennsylvania Water Co. claimed was necessary to retain a large industrial user. It also approved a 10.98-percent rate of return on equity and allowed the company to recover additional expenses for an admittedly high supply loss due to the acquisition of troubled water companies in recent years. Finally, the PUC reversed a ruling by the administrative law judge in the case and allowed the company to retain all gains from the sale of watershed land it had acquired when it purchased two water systems. Docket Nos. r-00973869, Oct. 14, 1997 (Pa.P.U.C.).
Natural Gas Choice. The Minnesota PUC has decided
to accelerate its review of competition in the state's natural gas industry. Several parties, including Enron Capital & Trade Resources Corp., want the commission to adopt rules to increase competition by requiring gas utilities to stop selling supplies by 2003 and instead distribute gas sold by other vendors. While agreeing that customer choice in the local gas market can "drive down price, improve quality, and spur technological innovation," the PUC does not plan to introduce competition yet, but convened a working group to study such a move. Docket No. g-999/r-97-1317, Oct. 28, 1997 (Minn.P.U.C.).
Telecom Certification. Noticing an increase in merger-
and acquisition-related activity in telecommunications, the Alabama commission decided to step up enforcement of its certification and notification rules for the industry. The commission said that all acquiring entities that do not otherwise possess authority to provide certain services must seek a certificate of public convenience. Docket 15957, Oct .23, 1997 (Ala.P.S.C.).
PBR Plans. The Oregon PUC rejected an agreement to
institute a new form of regulation for Pacific Power and Light Co., finding that the proposed performance-based rate plan would "likely result in higher rates than would be charged under traditional regulation." The utility, the state Department of Energy, the Citizens' Utility Board and major environmental groups had supported the plan. The commission agreed to keep the case open and directed parties to provide comments on how regulatory reforms might benefit ratepayers. The rejected plan included a 9.1-percent increase in consumer rates and a separate systems benefit charge to cover ongoing demand-side management and renewables incentives. Re PacifiCorp, dba Pacific Power & Light Co., UE 94 (Phase II, Order No. 97-371, Sept, 1997 (Ore.P.U.C.).
Public Policy Programs. The California PUC set dead-
lines of Oct. 1, 1998 and Jan. 1, 1999, respectively, to create advisory boards to oversee energy efficiency and low-income programs. The commission also authorized funding for advisory board start-up costs of $905,300 for energy efficiency and $839,000 for low-income assistance, but chose to wait until "important tax issues" are resolved before deciding how to administer the funds. The PUC plans to set up an interim plan for administering the funds. Decision 97-09-117, r.94-04-031, i.94-04-032, Sept. 24, 1997 (Cal.P.U.C.).
Power Marketers. The Michigan commission awarded a
certificate of public convenience and necessity authorizing power marketer Nordic Electric LLC to sell unbundled generation services in the electric service territory of Consumers Energy Co. The commission issued Nordic a "blanket certificate" allowing the marketer to serve the newly signed customers and any others in the same cities or municipalities. Nordic is precluded, however, from constructing its own transmission and distribution facilities to serve the customers under the new certificate. Re Nordic Electric LLC., Case No. u-11130, Oct. 20, 1997 (Mi.P.S.C.).
Direct-Access Programs. The Oregon PUC ruled that PacifiCorp must follow existing tariff filing regulations if it chooses to participate as a seller in a direct-access pilot program. It added, however, that the utility may file a tariff that describes the general terms and conditions of its participation but omits detailed pricing information, much like existing special contract offerings for larger customers. The commission said it would review whether the individual rates awarded by the utility under a direct-access program generate revenues sufficient to cover costs and to protect other customers from unfair increases. Order No. 97-408, Oct. 17, 1997 (Ore.P.U.C.).
Demand-Sidemanagement. The New Hampshire PUC allowed EnergyNorth Natural Gas Inc. to continue offering residential customers demand-side management services for an additional year pending a review of the broader issue of utility-sponsored DSM programs in the gas market. The DSM program includes a package of domestic hot water measures, heating system rebates, energy audits, attic insulation installations and setback clock thermostats. It also includes new cost-measurement requirements to deal with "free-riders" and to employ updated avoided-cost estimates. Order No. 22,731, Sept. 23, 1997 (N.H.P.U.C.).
Local Telco Competition. The Indiana commission approved
a permanent resale tariff for Ameritech Indiana, the state's largest local exchange carrier, that will allow competing carriers to purchase local exchange services at a 21-percent discount from existing retail charges. It had approved the discount earlier in an interim decision without a formal tariff authorizing the LEC to offer the resale services. The latest ruling permits newly certified competitors to begin providing service to residential and commercial customers. The commission also has directed GTE North Inc., another LEC, to file an interim resale tariff for review. Case No. 39983, Oct. 15, 1997 (Ind.U.R.C.).
FERC
Transmission Restraints. Wisconsin Public Power Inc. filed two complaints with the Commission against investor-owned utilities Wisconsin Power and Light and Wisconsin Public Service for allegedly denying it access to electric transmission lines, thereby preventing WPPI from importing electricity into eastern Wisconsin. WPPI had requested a three-year contract for firm transmission service to import 42 megawatts of electricity from a coal-fired generating plant in Grand Rapids, Minn., in which WPPI holds a 20-percent interest. The IOUs said they reserved most of the capacity on the lines for themselves as allowed under federal rules allowing allocation on a first-come, first-served basis. WPPI, made up of 30 municipal utilities, previously filed a similar complaint against Wisconsin Electric Power Co.
Hydroelectric Relicensing. The FERC has voted 2-1 to issue a precedent-setting order forcing the decommissioning and removal of a hydroelectric dam against the owner's wishes. FERC denied an application for license renewal of the Edwards Project, a 160-year-old, 3.5-MW dam owned by the Edwards Manufacturing Co. and the city of Augusta on the Kennebec River in Augusta, Maine. The action drew a sharply worded dissent from Commissioner Vicki Bailey, Project No. 2389-012, Nov. 25, 1997, 81 FERC (pp 61,252.
Stranded Costs. The FERC has issued a preliminary order requiring the Tennessee Valley Authority to provide electric transmission service to Cinergy Services Inc. so it can deliver electricity to the city of Bristol, Va. TVA had demanded $54.1 million in stranded investment reimbursement to provide the service. Docket No. TX07-9-000, Nov. 25, 1997 (F.E.R.C.).
Electric Transmission. The Chicago Housing Authority wants the FERC to order Commonwealth Edison Co. to provide network transmission service so it can receive power purchased wholesale from Wisconsin Energy Corp. and resell the discounted energy to its residents. Federal regulations would allow the housing authority to retain half the savings to improve its properties.
Electric Transmission. The Commission granted conditional approval to revisions to the open-access transmission tariff filed by Florida Power Corp. Florida Power had filed a revision to its tariff proposing a third category of service, "network contract demand transmission service," which incorporates some features of point-to-point and network transmission service. FERC recognized that under certain circumstances, the pro forma tariff does not provide enough flexibility, recognizing that sometimes the utility can propose superior terms and conditions. Docket No. ER97-3057-000, Nov. 25, 1997, 81 FERC (pp 61,247.
Order No. 888. The FERC on Nov. 25 reaffirmed open-access electric transmission and stranded cost rules of Order No. 888. The FERC said it would ensure a forum for stranded costs recovery caused by municipalizations and municipal annexation but only if there is a sufficient link with the FERC's open-access rule. In a related order, the FERC denied rehearing requests related to Order No. 889, the Open Access Same-Time Information System, which requires that electric transmission cost and availability be posted on the Interest. Order No. 888-B, Docket Nos. RM95-8-003, RM94-7-004, Nov. 25, 1997, 62 Fed.Reg. 64688-01, Dec. 9, 1997. Order No. 889-B, RM95-9-002, Nov. 25, 1997, 81 FERC (pp 61,253.
Public Power
Direct Access. The city of Palo Alto, Calif., has approved a direct-access plan allowing choice of electric suppliers to customers of its municipal electric system starting Jan. 1, 1998. The unanimous vote by the city council marks the City of Palo Alto Utilities as the only municipal utility Governed by a city council in the state planning to offer customer choice when competition begins.
Plant Divestiture. The Montana Power Co. on Dec. 9 announced that it will divest its electric generating plants, including 13 dams with 12 hydroelectric generators, four coal-fired plants, a leasehold in a coal plant, and 104 megawatts in purchased-power contracts. The estimated book value is $600 million for the 1,543 MW of capacity.
Business Wire
Sithe Energies, Inc., a subsidiary of French utilities group Generale des Eaux, has signed a contract to purchase the non-nuclear generating assets of Boston Edison for $657 million. The plants have a book value of $500 million. Sithe will add 12 power plants generating 2,000 megawatts of electricity to its North American portfolio, doubling its current capacity. Sithe plans to add 2,800 megawatts in the next three years at Boston Edison plant sites.
EnegyOne signed a $10-million, six-year contract with Saville Systems for advanced billing services to give consumers integrated billing for electricity, natural gas, telephone and other utility data. PECO Energy/EnergyOne will use the Saville program in Pennsylvania electric pilot program.
Chester, N.J., voters approved the sale of their municipal water system to New Jersey-American Water Co. for about $825,000. New Jersey-American is the only statewide investor-owned water utility.
CMS Gas Transmission and Storage Co. added Westcoast Energy as a partner in the TriState Pipeline project. Westcoast will acquire one-third ownership, while CMS will retain the remaining two-thirds and serve as managing partner. The project will have a capacity of 300 million to 1 billion cubic feet per day depending on market response. Costs are projected at between $230 million and $560 million.
Jones Capital Corp. and Enserch Development Corp. plan to build a 60-MW cogeneration facility. The companies signed an agreement to sell all power to Hawaii Electric Light Co. Construction was scheduled to begin this year, with commercial operation in early 1999.
Westinghouse Electric Corp. will sell its power generation business unit to Siemens for $1.525 billion cash. The remaining industrial business should be divested from the media company by mid-1998. Westinghouse Electric Corp. will be renamed CBS Corp.
Enron Corp. has required OPTEC Inc., expected to strengthen the telecommunications efforts of FirstPoint Communications, an Enron telecommunications subsidiary.
Itron signed a contract with Hawaiian Electric Co., the principal subsidiary of Hawaiian Electric Industries, Inc., for an AMR system. Beginning in early 1998, HECO will install 80,000 meters with the option to install up to 330,000 meters. The value of the 330,000 meter order is about $20 million.
The province of San Juan, Argentina, awarded the AES Corp. a concession for 230 megawatts of hydroelectric capacity. The concession consists of the rights to an existing 45-MW hydroelectric plant and the rights to construct two new hydroelectric plants. AES is expected to assume operation of the existing 45-MW plant in 1998.
Duff & Phelps Credit Rating Co. upgraded ratings of El Paso Electric Co.'s first mortgage bonds, collateralized pollution-control revenue bonds and preferred stock. It said the upgrades reflected the utility's solid performance since its emergence from bankruptcy in February 1996. D&P predicts a trend of further credit quality improvement.
Pacific Gas & Electric Co. and Southern California Edison have completed the first offerings of stranded cost bonds. PG&E's $2.9-billion and SoCalEd's $2.4 billion offerings were highly over-subscribed by investors. San Diego Gas and Electric is expected soon to make the next offering of $700 million in stranded cost bonds.
Delmarva Power & Light Co. and MBNA America Bank on Dec. 3 introduced the nation's first co-branded MasterCard in the utility industry. The MBNA Conectiv MasterCard program is designed to allow residential customers of Delmarva Power, which is merging with Atlantic Energy to form Conectiv, to earn rebates based on credit card use.
Unicom Energy Services and Engage Networks Inc. introduced a new energy tracking system that allows customers to follow their real-time energy consumption at multiple sites through the Internet. The system then analyzes the information, allowing the customer to better manage energy usage and costs. The system has been used at the 1996 Olympics and by Microsoft Corp. and the University of Connecticut.
Lori A. Burkhart and Phillip S. Cross are contributing legal editors and Beth Lewis is an editorial assistant with Public Utilities Fortnightly.
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