Cost

News Digest was compiled by Carl J. Levesque, editorial assistant, Lori A. Burkhart, contributing legal editor, and Bruce W. Radford, editor. For continual news updates, see www.pur.com.Nuclear Power

Transmission & ISOs

Transco Independence. Granting Entergy's request for a declaratory order, the Federal Energy Regulatory Commission ruled in a case of first impression that a stand-alone transmission company ("transco") would meet the test in Order 888 for independent system operators despite passive ownership by a power producer or other market participant.

The "duty to connect" demands definition - such as the optimal investment in local wires, and who should pay for it.

As the electric utility industry continues its slow but inexorable transformation into a more "competitive" industry, there has been a notable absence of discussion concerning continued regulation of local distribution utilities, or discos.

PUCs turn their attention to what they can still control.

The battleground has shifted. Utilities that last year worried about winning customers in pilot programs for retail choice now face public audits on the reliability of transmission and distribution.

With rate cases in remission, no nukes on order and generation planning left to the market, public utility commissions are turning their attention to what they can still regulate. That means service quality. Nor are PUCs the only ones involved.

Eight states blame upwind sources. Agency to revisit emissions targets.

The U.S. Environmental Protection Agency's Sept. 24 rule for 22 eastern states to file plans to reduce nitrogen oxide emissions would ostensibly reduce transport of ground-level ozone, or smog, in so-called "nonattainment areas." But eight of these affected states have filed petitions arguing that NOx emissions blowing in from nearby jurisdictions must be controlled before they can comply.

So far, in preliminary statements, the EPA has indicated that at least some of these petitions have merit.

Studies and Reports

Natural Gas Retail Choice. Utility affiliates hold large market shares in natural gas customer choice programs, raising questions about the extent of true competition, according to a study released on Dec. 15 by the U.S. General Accounting Office. Participation varies by region, however, according to the report, "Energy Deregulation - Status of Natural Gas Customer Choice Programs."

In Pennsylvania, for example, three out of four programs showed very high shares for utility affiliates. The Equitable Gas Co.

Water rates continue to increase - by more than 10 percent in some cities.

The costs of improving water quality to meet mandates are proving too large to be diluted unnoticed into consumers' bills, many agencies are finding.

While the trend of increased water costs continues with U.S. rates up an average of 2.6 percent from 1997 to 1998, a new study reveals that some cities experienced increases of more than 10 percent.

State PUCs

Distributed Generation. California opened a rulemaking proceeding to consider regulatory reforms in electricity distribution service, with a possible focus on distributed generation. The commission emphasized that its intent was not to define new policies, but to gather information. Comments are due March 17, and the commission intends to consider a proposal from the assigned commissioner this summer. Rulemaking 98-12-015, Dec. 17, 1998 (Calif. P.U.C.).

Gas Transportation Rates.

Will inaction in the Senate and House prompt FERC to move ahead?

About 36 bills with the word "electric" in them were introduced in the 105th Congress. According to Capitol Hill and industry association staff, the 106th Congress, officially begun Jan. 6, appears likely to see fewer restructuring bills, but steadfast champions.

Likelier still are developments outside of Congress that will shape energy policy and perhaps beat legislators to the punch.

Tales of bad faith, cold feet and price manipulation.

Lollipops"/fn1/ and "loopholes." "Islands" and "peninsulas." Utilities have invented a colorful new lexicon to explain what's happening at power pools and regional transmission groups. Yet the basic issue remains familiar: How to gain a competitive advantage.

A tale of three deals - ADT, Westinghouse, KCPL - at Western Resources.

Sensing changes in the utility industry, Western Resources Inc. in 1994 began to examine what it was and what it needed to be - to customers, to investors and to other constituencies. Through an extended exercise in strategic planning, we produced a rather typical end product: a document outlining a hypothetical future of growth, financial strength and customer satisfaction.