Frontlines

ISO Meltdown?

Some wanted to shut down New York's power markets. Then cooler heads prevailed.

News Digest

Telecoms may offer IOUs a model for multiplying market caps by dividing their shareholdings.

April 1, 2000

Before the industry can tap into the Web's full potential, it needs to remove some roadblocks - without regulating itself into a corner.

Everyone involved in energy recognizes that deregulation is driving major changes in how the industry operates. What some may not recognize is that the evolution of e-commerce is compelling even greater changes in the way energy is marketed and purchased in both wholesale and retail markets.

They see leasing and dark fiber as "no-risk" ventures, with more upside potential.

Few seem ready to predict when demand might wane for rights-of-way for long-haul telecommunications. The consensus suggests a long-lived market - with interstate natural gas pipelines primed to take advantage. The question seems not so much whether to dive in, but how deeply to get involved.

Should pipelines stick to leasing rights-of-way to carriers? Or should they lay fiber and perhaps offer their own long-haul services?

Some partners turn to the quick sale to raise capital and dress up performance.

Analysts cite several reasons why energy companies might wish to execute a spin-off:

* To cover a failed merger,

* To raise cheap capital, or

* To boost valuation of a diversified company.

In fact, many newly merged energy companies will fit into this last category. No longer just power companies, they now own merchant generation, transmission, pipelines and telecommunications assets.

"Sensible Approach" or Misguided Meddling?

The proposal by Reps. Franks and Meehan to sell federal power at market rates provokes conflicting responses from readers.

I am writing in response to an article written by Reps. Franks and Meehan entitled, "The Sensible Approach: Federal Power at Market Rates," published in the Nov. 1, 1999 edition of Public Utilities Fortnightly (see pp. 44-47). I agree that it is outrageous that electricity services for people in the Northwest are subsidized (regardless of the customers' ability to pay) by the rest of the people in this country.

Mergers & Acquisitions

NSP + New Century. The Federal Energy Regulatory Commission OK'd the merger of Northern States Power Co. (NSP) and New Century Energies Inc. (NCE), to form Xcel Energy Inc., on condition that the new company would join the Midwest Independent System Operator. FERC Docket No. EC99-101- 000, Jan. 12, 2000, 90 FERC ¶61,020.

* Rate Pancaking. The FERC found no problem with transmission rate pancaking with the MISO condition, even though NCE subsidiary Southwestern Public Service Co. (SPS) belongs to the rival Southwest Power Pool.