Stranded costs

Mitigating "Mandated" Rate Hikes

How to develop balanced revenue-backed financing to manage the impacts of governmental mandates.

Severe upward pressure on electric rates after a decade of stability has regulators, legislators, utility executives, consumer advocates, and myriad other stakeholders searching for solutions. Revenue-backed financing can mitigate many of these mandate-driven rate increases significantly. These programs must, however, be designed to eliminate the inefficiencies and inequities that can be associated with revenue set-aside programs.

The Green Controversy

Who should have "green tag" ownership under power purchase agreements, the buyers or the sellers?

Who should have "green tag" ownership under power purchase agreements, the buyers or the sellers?

A legal controversy is brewing in the electric industry over who should reap the financial benefits of the green characteristics of power plants, under existing power purchase agreements (PPA).

Off Peak

Mitigation depends on the market. For regulators, that means a going-forward view.

If regulators allow recovery of some stranded costs, they should at least ensure that utilities operate their generating plants in a manner consistent with the actions taken by other owners of similar resources that participate in competitive markets for bulk power.

A priori estimates of stranded costs are almost certain to be wrong. Therefore, regulators should adjust recovery to reflect actual events (em in particular market prices for electricity.

News Analysis

Hurdles loom in 10 states eyeing deregulation.

Lawsuits and delayed deadlines. A "go slow" approach and more studies. Stranded cost debates and commission reports that make recommendations but avoid concrete action.

With a new wave of states addressing electric competition, these are a few of the themes that have emerged in 1998. In most states, the process has been slow, though the start of competition does, in fact, appear closer in many.

The Electric Competition Debate in...Ohio

WHAT IF YOUR STATE LEGISLATURE THREW A PARTY and you had to go? Best of all, this power party cost less than the one you went to (em and paid more to attend (em last year.

In simple terms, that's how some observe Ohio's latest proposal to convince the state's 11 million wary consumers to choose their electricity provider.

Two Republican state legislators have proposed the consumer-bent transitional system, called retail marketing areas or RMAs, as part of a broad electric restructuring program. The pair, Sen. Bruce E. Johnson and Rep. Priscilla D.

The Electric Competition Debate in...Texas

PAT WOOD III LIKENS HIS JOB TO CLEARING THE UNDER-brush "so the general can march through."

The "general" is the Texas Legislature; Wood is chairman of the state Public Utility Commission; the battle is electric utility restructuring.

To an outsider, it looks like Wood's commission is way out in front of the state's elected officials. Legislators are adjourned this year but the seven-member Senate Interim Committee on Electric Utility Restructuring is doing its best to sort through hearings on market power, transmission and distribution, reliability and other issues.

Perspective

With benefits unclear, PUCs will "go slow."

California, New Hampshire, Massachusetts, Nevada, Pennsylvania, Rhode Island, and Vermont have given customers the right to choose their electric providers.

Other states are considering similar legislation.

In Congress, U.S. representatives Schaefer (R-Colo.), Markey (D-Mass.), DeLay (R-Tex.), and U.S. Sen. Bumpers (D-Ark.) and others have slapped bills on the table that would give choice to electric customers on a national scale.

Pipeline Restructuring: Slicing a Shrinking Pie

THE FERC TAKES SUGGESTIONS ON THE FUTURE OF THE GAS INDUSTRY.

Earlier this year, the Federal Energy Regulatory Commission opened a discussion of issues facing the natural gas industry. Its aim? To set "regulatory goals and priorities" for the era following from Order 636, issued in 1992. %n1%n

To gather input, the FERC scheduled a two-day public conference. It asked for comments on a myriad of topics, ranging from cost-of-service rates to hourly gas pricing and services.

Special Report

Feds prefer legislative solution for now, but warn of bid-rigging, cartel behavior later on, after deregulation.

One of the nation's top antitrust officials told the House Judiciary Committee in June that moves toward utility deregulation should focus first on open access to the transmission grid (em and then resolve that problem through rulemaking or legislation, not antitrust enforcement.

"Antitrust is probably not the best way to address access," said Robert Pitofsky, Federal Trade Commission chair.