MICHIGAN CHOICE APPEAL. Michigan Attorney General Frank Kelley filed an appeal in the Michigan Court of Appeals of the Michigan PSC's Jan. 14 rehearing order (News Digest, March 15, 1998, p. 18) adopting a phase-in schedule for electric restructuring and retail choice for Consumers Energy and Detroit Edison. Kelley alleged that the order fails to create a competitive generation market or foster lower rates. He called it an "outrage," that gave the utilities everything they wanted. Case Nos. u-11290 et al., Feb. 13, 1998 (Mich.P.S.C.).
NEW HAMPSHIRE RESTRUCTURING. The U.S. Court of Appeals for the First Circuit has affirmed lower court rulings denying intervention to six ratepayer parties in a federal suit challenging New Hampshire's electric restructuring plan. It rejected attempts by the parties to establish their interest in the case based on claims that if the plan were overturned, they would lose an opportunity for lower rates. The court found that "every electric consumer in the state yearns for lower rates" and that the claim has an "overly contingent quality" in that it is based on an interaction of market variables the outcome of which is "anybody's guess." Public Service Co. of N.H. v. Patch, Nos. 97-1759 et al., 1998 wl 32503, Feb. 3, 1997 (1st Cir.).
TELCO ACCESS CHARGES. A Georgia appeals court ruled that state regulators erred when they used sales growth as an offset to determine how much to compensate local exchange telephone carriers for bringing intrastate access charges in line with interstate rates. The court said that state law required that LECs receive compensation for revenues lost during the phase-down to achieve parity with interstate rates, but that nothing in state statutes indicated that growth in access revenues should be calculated as an offset. Ga. PSC v. Alltel Georgia Communications Corp., No. a97a1997, Feb. 12, 1998 (Ga.App.).
PUC ARBITRATIONS. A U.S. district court refused to interfere in a dispute between Ohio regulators and a local exchange carrier regarding arbitration of interconnection negotiations between GTE North, the local carrier and Sprint Communications Co., which was seeking entry into the local market, saying the case was not ripe for review pending a final order by the Ohio Public Utilities Commission. GTE appealed after the PUC allowed Sprint to modify an interconnection agreement it had reached with GTE under PUC-sponsored arbitration. GTE claimed the commission had failed to protect its interests in the case. GTE North Inc., v. Glazer, Case No. 5:97 cv 0554, Jan. 14, 1998 (E.D.Ohio).
GAS TRANSPORTATION. The Michigan Court of Appeals upheld a 1995 ruling by the Michigan Public Service Commission that had allowed Consumers Power Co. to discount gas transportation rates to keep one of its largest customers, James River Corp., on its system, if the utility would accept the risk of a revenue shortfall. It denied the utility's appeal that the full allocation to shareholders of any revenue loss marked an unconstitutional taking of its property, saying the discount was the utility's choice, not mandated by the PSC. Consumers Power Co. v. Mich. PSC, No. 184218, u-10651, 1997 wl 643431, Oct. 15, 1997 (Mich.App.).
DOE APPROVES POWER EXPORTS. Megawatt-Hour Store, one of the nation's largest power marketers and subsidiary of Consolidated Edison Co. of New York Inc., has received an export license from the U.S. Department of Energy to trade power directly with Canada provincial governments. The license allows power generated by Con Edison or bought by the licensee to cross the U.S.-Canada border on any transmission line. Power traders can sell electricity directly to Ontario, Quebec, and New Brunswick.
NRC CONFRONTS DECOMMISSIONING. Shirley Ann Jackson, chairwoman of the Nuclear Regulatory Commission, said the NRC faces three new problems with electric restructuring: (1) funds for nuclear decommissioning; (2) electricity grid reliability; and (3) cost cutting on nuclear operations.
HOUSE STILL "UNSURE." U.S. Representative Ralph Hall (D-Texas), a member of the House Commerce Committee, addressed utility restructuring on Feb. 10 at the Natural Gas Roundtable in Washington, D.C. Hall said Congress was unsure of what to do regarding a federal bill because more than 40 states already have taken action. Hall was "happy" with the restructuring hearings process (em about 25 Commerce Committee hearings have been held (em and said he believes some "excitement" has been generated as a result. Hall wants states to continue their restructuring efforts, but believes Congress should move forward on a bill dealing with uniquely federal issues.
SENATE WITNESSES WANTED. Sen. Frank H. Murkowski (R-Alaska), chairman of the Senate Committee on Energy and Natural Resources, has called for more workshops to build consensus for electric restructuring legislation. He said he would ask for witnesses from the Clinton Administration to appear before the committee to provide a legislative proposal and offer views on restructuring bills already referred to the committee.
Murkowski expressed dismay at the lack of an Administration proposal." This announcement should be a catalyst for the Administration to formulate its position, but if it tries to implement the unratified Kyoto treaty through electricity restructuring legislation, the Administration needs to rethink that position," Murkowski said. House of Representatives, Majority Leader Dick Armey (R-Texas) aligned with Commerce Chairman Tom Bliley (R-Va.) and put an electric restructuring bill on the floor calendar for April.
ANCILLARY SERVICES. The FERC issued its first order setting
guidelines for applicants that want to sell ancillary electric services at market-based rates. Four affiliates of Houston Lighting & Power Co. had applied for the rates. The utility recently agreed to purchase four electric generation plants from Southern California Edison Co., as part of state restructuring. Each affiliate has been assigned a contract to purchase one of the four plants, two of which are designated "must-run." FERC now will entertain requests for market-based pricing of ancillary services case-by-case if supported by analyses demonstrating the seller lacks market power. Docket Nos. er98-927-000, Feb. 11, 1998.
ABANDONED TRANSMISSION. The FERC directed Southern California Edison to share costs 50-50 with customers for abandonment of the Devers-Palo Verde 2 transmission facility, as part of its order setting for hearing executed ISO contracts. Independent energy producers had objected to SoCalEd's proposal to pass through all costs to transmission users, arguing the project was intended to increase net imports into Edison's service territory rather than to support reliability. Docket Nos. er98-990-000 et al, Feb. 25, 1998.
ELECTRIC DIVESTITURES. The FERC has authorized Long
Island Lighting Co. to transfer non-nuclear generation assets (plus natural gas assets and common plant) to the Long Island Power Authority as part of a plan by New York state to restructure LILCO, which charges electric rates among the highest rates in the nation. The FERC held the transfer would not adversely affect competition, rates or regulation, as required under its electric merger policy. It marked the first occasion after Order No. 888 that a utility has sought approval to dispose of interstate transmission facilities to a municipal utility. FERC was pleased that LIPA voluntarily agreed to file an open access tariff conforming to Order No. 888. Docket No. ec9-45-000, Feb. 11, 1998.
Studies & Reports
NATIONAL ENERGY POLICY. Secretary of Energy Federico Peña
on Feb. 11 said public input was needed to help shape the Clinton Administration's energy policy. DOE is soliciting input on a 15-page draft document, Draft Comprehensive National Energy Strategy, which identifies key energy policy goals, objectives and strategies: improving efficiency; ensuring against energy disruptions; promoting energy production and use in ways that reflect human health and environmental values; expanding energy choices; and cooperating internationally on energy issues. The report is available at www.eren.doe.gov/nes.html.
ELECTRIC/TELECOM CONVERGENCE. Frost & Sullivan released a new report, U.S. Strategies for Utilities in Telecommunications, which examines heavy investment begun by electric utilities in the telecommunications industry. The report advises that the Telecommunications Act of 1996 presented opportunities for utilities to leverage their customer base and valuable rights-of-way by offering telecommunications services. It predicted the telco industry will grow 7 percent per year, compared with the "stagnant" 1.1 percent growth rate for the electric power industry for 1996-2003.
Florida Power Corp. designed a new electric pricing plan to meet the needs of winter customers who connect to its system seasonally. It marks the first investor-owned utility in Florida and the first in the southeast to make such an offering. Seasonal pricing will be available from March through October to customers who use 210 kWh/month or less. A three-month minimum absence is required to be eligible for the rate.
Central Vermont Public Service Co. signed an agreement to use Pegasystems Inc.'s customer service management software. Implementation of the program should be completed within six months.
Tractebel Power Inc., a member of the Brussels-based international energy and industrial services group, Tractebel S.A., in partnership with FPL Group, purchased two 300-megawatt gas-fired combined-cycle facilities in Bellingham, Mass., and Sayreville, N.J. The total consideration of the purchase is more than $500 million. Tractebel Power also acquired Simpson Paper's 40-MW natural gas-fired San Gabriel Cogeneration Facility.
Consolidated Edison Development, a wholly owned subsidiary of Consolidated Edison Inc., formed a partnership to build a 40-megawatt power plant in Guatemala. Con Edison Development will own about 44 percent of the plant and will have two of the six seats on the board of directors of the company, Generadora Electrica del Norte Limitada. Interamerican Power and Light Corp. remains the majority owner of the $46-million project. Construction on the project is about 50 percent complete.
Edison International shareholders can access their accounts through the company's home page, www.Edisonx.com.
Arizona Electric Power Cooperative and Salt River Project signed a memorandum of understanding to help the two electric utilities work together in Mexico. The utilities will examine the transmission access to Mexico and strategies to serve customer loads in Mexico once the Comision Federal de Electricidad opens the industry to privatization. The companies also will consider joint projects and programs to create increased business opportunities between SRP and AEPCO and Mexico.
MASSACHUSETTS CHOICE. The Massachusetts Department of Telecommunications and Energy issued terms and conditions covering offerings by electric distribution companies to retail customers, competitive suppliers and other utilities under competition. The DTE set out rules for distribution and default generation services for customers who choose a new supplier as well as standard-offer generation services to those customers who remain on the system. The rules also cover aggregation requirements, customer usage information, and customer authorization rules. Distribution utilities may propose tariffs that vary from the guidelines on a "strong showing" of special company-specific circumstances. The DTE ruled that meter ownership should remain with the distribution companies pending resolution of technical issues of allowing customers or their competitive suppliers to control metering decisions. It said that installation of advanced metering equipment was crucial to the development of full competition. D.P.U./D.T.E. 97-65, Dec. 31, 1997 (Mass.D.T.E.).
MAINE DIVESTITURE. The Maine Public Utilities Commission approved a plan proposed by Central Maine Power Co. to divest its generation assets. The company has completed two rounds of bidding and has agreed to sell its hydro power, fossil and biomass business units to Florida Power and Light. The commission said that the company's decision to bundle its generation assets and to use a staged bidding process could enhance the value of the generation assets, but that the process also raised market power concerns, which the utility must address at future sale approval proceedings. Docket No. 97-523, Order (Part II), Jan. 14, 1998 (Me.P.U.C.).
On Feb. 9, Bangor Hydro-Electric Co. filed its generation plant divestiture plan with the Maine PUC. The utility will offer 166 megawatts of generation assets at seven projects with a book value of $40 million. It includes interests in eight hydroelectric projects, with 44 MW of installed capacity qualifying as renewable under the restructuring law.
CUSTOMER EDUCATION. The Maine PUC adopted rules for
consumer education efforts designed to inform electric users about retail access opportunities scheduled to open on March 1, 2000, to be funded through an assessment against the revenues recovered from ratepayers by electric transmission and distribution utilities. The rule allows utilities to recover costs for responding to consumer requests for information, but not for nonconforming education efforts launched by utilities on their own initiative. Docket No. 97-583, Jan. 30, 1998 (Me.P.U.C.).
DISTRIBUTION REGULATION. The Oregon Public Utility Commission adopted a draft of a distribution-only form of regulation for Pacific Power and Light Co. that includes: (1) a cap for distribution revenues; (2) performance measures for increased service quality; (3) a revenue-sharing mechanism for excess earnings; (4) a non-bypassable system benefits charge and (5) a renewable resource incentive to allow recovery of energy efficiency and "sustainable energy" investments. The electric utility may review the plan and notify the PUC whether it will accept its terms. Draft Order, Jan. 15, 1998 (Ore.P.U.C.).
AFFILIATE OVERSIGHT. The Idaho Public Utilities Commission has authorized Idaho Power Co. to form a holding company and to transfer non-utility subsidiaries and operations to the new corporate entity. Idaho Power agreed to guarantee the commission access to the books records officials and staff of all proposed subsidiaries as well as reports of transactions between the utility and its affiliates. Case No. ipc-e-97-11, Order No. 27348, Jan. 29, 1998 (Idaho P.U.C.).
EXCESS WATER CAPACITY. The Indiana Utility Regulatory Commission authorized Indiana-American Water Co. to increase rates by 9.6 percent despite claims that the utility had overbuilt its filter plants for future needs. It rejected a proposal by the state utility consumer advocate to disallow certain facility costs as excess capacity. The advocate pointed to a new formula that would allow inclusion of construction costs in rate base only to the extent that the plant's rated maximum capacity is projected to satisfy a maximum day demand during the rate effective period. The commission said that proposal would not support adequate planning for safe and reliable service. Case No. 40703, Dec. 11, 1997 (Ind.U.R.C.).
FUEL COST RECOVERY. The Hawaii Public Utilities Commission approved fuel oil supply arrangements between Hawaiian Electric Co. and its supplier, Chevron Products Co., but questioned the need for the utility to use its energy cost adjustment clause to recover associated costs. Considering the long-term nature of the supply arrangements and the stability of fuel prices, the commission opened a generic investigation into the utility's continued use of the clause. Docket No. 97-0397, Decision & Order No. 16141, Dec. 30, 1997 (Haw.P.U.C.).
TELCO RESALE DISCOUNTS. The Michigan Public Service Commission reduced the discount Ameritech Michigan must offer competitive resellers of its services. It lowered the approved discount rate for offerings without directory assistance and operator service from 25.96 percent to 21.55 percent. It agreed with the carrier that it had double-counted operator systems and call completion and number service expenses in its prior ruling on the matter. The established discount of 19.96 percent for resellers that use Ameritech's operator services remains unchanged. Case No. u-11280, Jan 28, 1998 (Mich.P.S.C.).
ECONOMY SALES. The Florida Public Service Commission
issued a generic order governing costs and revenues associated with economy energy transactions by electric utilities. It said that since the Federal Energy Regulatory Commission had required the utilities to unbundle transmission and ancillary charges from economy energy sales, the state's utilities had implemented varying pricing and cost recovery methods for the treatment of "broker sales" for retail rate-making. The rules were designed to maintain the same level of ratepayer benefits as before implementation. Docket No. 980001-ei, Order No. psc-98-0073-fof-ei, Jan. 31, 1998 (Fla.P.S.C.).
CUSTOMER AGGREGATIONS. The Ohio PUC approved the first
conjunctive electric service tariff for an Ohio utility. The tariff was accepted for Monongahela Power Co. The PSC had approved CES guidelines in December 1996 as part of Ohio's Energy Strategy. The CES tariffs permit utilities on a pilot basis to allow groups of customers within their existing service territories to aggregate and negotiate prices, rate design and other elements. Case No. 96-406-el-coi, Feb. 12, 1997 (Ohio P.U.C.)
ELECTRIC/TELECOM CONVERGENCE. The Georgia PSC ruled that
the Municipal Electric Authority of Georgia is not eligible to apply for certification to sell telecommunications services on its planned $35-million fiber-optic network. MEAG had argued that the introduction of competition to the electric industry required an infrastructure available to distributors to allow for a host of electric pricing options and more efficient management of its statewide electric system. MEAG's proposed 1,200-mile fiber-optic network would deliver other communications services such as telephone, cable and Internet. Docket No. 7967-u, Feb. 17, 1998 (Ga.P.S.C.).
MERGER SAVINGS. The Ohio PUC opened two inquiries
into mergers proposed between (1) Allegheny Power System Inc. And DQE Inc., and (2) American Electric Power Inc. and Central and South West Corp. The PUC will review how the companies will pass along merger-related savings to Ohio ratepayers and whether to impose safeguards concerning transactions with affiliates. The commission also wants the merged companies to submit plans for an independent system operator.
In the Allegheny/DQE case, the PUC is exploring how the addition of DQE's nuclear generating assets will affect Ohio ratepayers, since Allegheny owns no nuclear assets. For the AEP/CSW merger, the PUC is looking into how the merged company will comply with federal clean air regulations, and manage their separate system dispatch. Case Nos. 98-113-el-mer and 98-114-el-mer (Ohio P.U.C.).
News digest is compiled by Lori A. Burkhart and Phillip S. Cross, contributing legal editors, and by Beth Lewis, editorial assistant.
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