Reliability

A former state regulator notes serious problems in Northeast power markets, and offers remedies.

April 1, 2000

STATE PUCS

Distributed Generation. In December and January the Illinois commission took comments from utilities, marketers, manufacturers, and trade and advocacy groups on how to develop policy on distributed generation.

* Rulemaking Strategy. Enron has urged the state to proceed in a fashion similar to the California PUC's

two-track investigation. It asked for two separate rulemakings on (1) interconnection standards for DG installations of 50 megawatts or less, and (2) rate design and operational issues.

* Unit Size Limits.

Read the RTO Rule. You'll see that it paves the way for transcos.

On Dec. 20, the Federal Energy Regulatory Commission hit the streets (both Wall and Main) with Order 2000, its rule on regional transmission organizations (RTOs). Ever since, utilities, investors and their advisers have been poring through the 727 pages of the document. They want to know, "What does the FERC really want?"

The question is not simply academic. On March 1 in Cincinnati, the FERC will open the first of five collaborative workshops to explore the RTO Rule and help the industry respond.

An interview with David A. Boger, Stephen D. Moritz and Joseph G. Baran of Strategic Energy Ltd.

The expiration and renegotiation of firm transportation contracts on the pipelines in North America is becoming increasingly complex. For example, TransCanada Pipeline ("TransCanada") in the past consistently renewed its expiring contracts for five- to 10-year periods at maximum rates. It also regularly expanded its capacity, requiring 10-year commitments two years in advance of availability.

Utility restructuring seems to prompt more lawsuits by customers.

In Chicago, Commonwealth Edison Co. settles a class action lawsuit for a heat-wave outage, paying $2.5 million for items including "food spoilage," to customers served by certain city substations. In California, Pacific Gas & Electric Co. spends $8.3 million to resolve 98 percent of some 6,600 outage-related claims.

I know what you are thinking. We're in an age of deregulation, so the role of the state public utility commission is diminishing. You feel you can cut back on your regulatory affairs staff and concentrate on your business - on your marketing plan. Well, think again.

"Deregulation" doesn't quite describe what's happening today in energy and telecommunications. In reality, we are restructuring, not deregulating. And restructuring will raise a number of difficult issues that, like it or not, must survive review by your friendly state regulator.