Stranded Costs Projected at -$2.9B to $22B
The Texas Public Utility Commission (PUC) was scheduled this month to consider estimates of retail competition's impact on electric utilities.
A draft staff report, yet to be reviewed by the PUC, estimates stranded costs that span a high of $22 billion to a low of negative $2.9 billion.
Phillip S. Cross
The Massachusetts Department of Public Utilities (DPU) has decided to use separate cost methods 1) to determine whether a local telephone service is subsidized, and to set price floors for essential monopoly services provided by NYNEX, a local exchange carrier (LEC); and 2) to set rates and price floors for competitive services.
According to the DPU, Total Service Long Run Incremental Cost (TSLRIC) was undisputed as the proper method of testing for subsidies between services.
Sound bites from state and federal regulators.
Storm Damage Costs. Hawaii rejects proposal by electric utility for statewide surcharge to recover hurricane damage costs. Says that "regulatory compact" requires utility to quickly repair damage and restore service to consumers in return for recovery of all prudently incurred costs. Dkt. No. 94-0097, Aug. 7, 1996.
Gas-supply Incentives. Missouri increases LDC's rates by $9.5 million.
Lori A. Burkhart
The Federal Energy Regulatory Commission (FERC) has announced two policy changes in its first final order on negotiated rates under its policy statement on Alternatives to Traditional Cost-of-Service Ratemaking. The FERC will now require pipelines to file either negotiated rate contracts or tariff sheets that reflect the essential elements of their negotiated rate agreements. In addition, pipelines will no longer be permitted discounted adjustments to their recourse rates.
The case involved NorAm Gas Transmission Co. (Docket No. RP96-200-001).
The spectre of retail competition in electricity presents some difficult but solvable technical problems in creating new markets. It could lead to a new world of regulation. At the least, it will expose some currently protected utilities to potential losses that could prove substantial.
This prospect of losses has inspired some high-cost utilities to mount a formidable defense of the status quo, coupled with an aggressive offense to shape the transition.
Mark E. Krebs
How the electric industry uses DSM and IRP to build load, ignoring basic truths found in fuel-cycle analysis.It was during the early 19th century that General von Clausewitz announced his nine principles of warfare.
Phillip S. Cross
The Connecticut Department of Public Utility Control (DPUC) has set rates charged by Southern New England Telephone Co. (SNET) for service elements for local exchange carrier (LEC) services provided at wholesale to new competitors in the LEC market.
It identified the Total Service Long Run Incremental Cost (TSLRIC) method as the starting point for its ratemaking decisions, but rejected arguments by several parties to employ TSLRIC without any further contribution to joint and common costs.
Michael T. Maloney, Robert E. McCormick, and Chad A. McGowan
Recovery: All FERC'ed Up
By Michael T. Maloney, Robert E.
McCormick, and Chad A. McGowan
The "lost-revenues" approach in Order 888 ignores the fact that cash flow drives
asset valuation . . .
. . . the key to measuring uneconomic investment.
Dan Richard and Melissa Lavinson
Early on in the debate, the legislature had signaled the commission that it would need the blessing of lawmakers to pursue its agenda.This past August, during the waning days of a two-year session, the California Legislature unanimously passed a landmark bill to deregulate the state's $23-billion electric utility industry.
The new law, known as "Assembly Bill (AB) 1890, largely reaffirms the broad outlines of the December 1995 Final Policy Decision issued b
Phillip S. Cross
The California Public Utilities Commission (CPUC) has approved a Total Service Long Run Incremental Cost (TSLRIC) study submitted by Pacific Bell, a local-exchange carrier (LEC), for use in pricing bundled and unbundled basic-service network offerings. The CPUC rejected similar studies submitted by GTE California, Inc., finding that the LEC had employed flawed methodologies and that the studies lacked adequate supporting data.