Ask this question: Are Investors today earning what they thought they would, back when they last had faith in regulation?
As their customers discover more competitive prices, many utilities remain saddled with the costs of uneconomic plant and power purchase contracts approved under regulation. They seek compensation for these costs, but the amount deserves a close examination.
Some utilities seek remuneration that exceeds the market value of their common stock. Such a settlement seems overly generous for investors, who will continue to own their shares after the payoff.
Lori A. Burkhart, Jamie B. Simon, and Elizabeth Striano
Electric restructuring at the state and federal levels is moving forward fast (em too fast for some. Utilities, unions, consumers and even legislators are making their opposition known by filing lawsuits to block or slow down various restructuring initiatives, from New England to Dixie to the Desert Southwest.
Rolling Back Legislation
Pennsylvania and New Hampshire already have enacted legislation to guarantee customer choice in retail electric markets. Even so, some parties are asking for a rollback.
In a court-ordered auction held March 19, a federal bankruptcy court judge selected a proposal by LG&E Energy Corp. to lease the generating assets of Big Rivers Electric Corp.
LG&E Energy will lease about $1.3 billion of the generating assets of the bankrupt Henderson, Ky., cooperative for 25 years, and provide power to Big Rivers to serve its member cooperatives and 90,000 customers.
Previously, it appeared PacifiCorp would get the lease agreement, which is the centerpiece of the Big Rivers' reorganization plan. But U.S. District Judge Jennifer B.
While authorizing Nashville Gas Co. to increase rates by $4.417 million, the Tennessee Regulatory Authority has modified its existing policy on the treatment of advertising expenses in gas rate cases.
The authority abandoned a past policy limiting advertising recovery to 0.5 percent of the company's gross revenues. It also ordered a 50-50 sharing between ratepayers and shareholders. It granted, however, the LDC's request for full recovery of both payroll and nonpayroll "sales promotion" costs, rejecting allegations the costs should be treated as advertising expenses.
PUC endorses direct access, plant divestiture and limits on recovery of stranded costs. Says order will not interfere with 1990 bankruptcy plan for Northeast Utilities. The New Hampshire Public Utilities Commission has issued its final plan for restructuring the state's electric industry, at the same time announcing what is believed to be the first formal policy decision by a state utility commission that would deny full recovery of costs left "stranded" by the transition to competition.
Wall Street loves stranded costs. No kidding. For stockbrokers and underwriters accustomed to selling utility issues to widows and orphans, the prospect of asset-backed financing opens a whole new world. I'm talking here about "securitizing" stranded costs.
In a securitization, a trust takes beneficial title to utility assets (tangible or intangible) that have lost their value in the market, and sells "transition bonds" to a new set of investors, funneling the bond sales proceeds back to the utility and to its equity investors. Who pays the coupon? Why, it's the customer of course.
"It's going to take a lost of time to understand all the pies."
It's almost spring. There's a new energy secretary(emisn't there? And at least for new electric restructuring bills in Congress. Sen. Frank H. Murkowski (R-Alaska) is chairing "workshops" on deregulation at the Energy and Natural Resources committee.
Everyone's wondering: Which bill take hold? Where will it be and how will it look by the end of the legislative session: dead, alive, or limp?
Utilities Commission, the CFO of Northeast Utilities, John H. Forsgren, warned that a proposed electric deregulation plan could push subsidiaries Public Service Co. of New Hampshire, and North Atlantic Energy Corp. into bankruptcy.
Consulting company LaCapra Associates gave its deregulation report and recommendations on Jan. 3 to the PUC. The Jan. 20 hearing was aimed at examining stranded costs, and what portion of its $800 million stranded costs PSNH would be allowed to recover.
Bonneville Power "Subscriptions" Seen Among Sticky Issues
A panel of governors in the Pacific Northwest expects to issue a plan this month that proposes a restructured Bonneville Power Administration, primed for the regional free-market electric economy.
The panel would act on a steering committee report that resolved pressing energy matters in the Northwest. But the committee report left open other issues that some say could leave the BPA's future in doubt.
J. Michael Parish, Richard S. Green and Stephen H. Kinney
Targeted Debt: Give the Stockholders What They Want
Too much leverage can be risky, but sometimes it's just what the doctor ordered.
One of the reasons that stockholders in Columbia Gas survived a Chapter XI proceeding more nearly intact than owners of other bankrupt utility enterprises was that the parent holding company was a secured creditor of its operating subsidiaries at the time of the filing.
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