Transmission

Jay L. Witkin replaces Jerome Feit, who retired, as the Federal Energy Regulatory Commission's solicitor. Also at the FERC, Judith Ann Dowd will serve as an administrative law judge. Dowd joins the FERC from the National Labor Relations Board.

PacifiCorp hired John Carr as assistant v.p., global industrial sales. Carr joins PacifiCorp from Direct Services Industries, where he served as an executive director.

Melissa L. Reese was hired by CMS Marketing, Services and Trading as a natural gas trader. CMS Marketing is the energy marketing unit for CMS Energy Corp.

More than a decade ago, working at the energy laboratory at the Massachusetts Institute of Technology, the late Fred Schweppe devised a novel scheme for pricing electric transmission. His solution? Do nothing. Simply ignore transmission.

Ask this question: Are Investors today earning what they thought they would, back when they last had faith in regulation?

As their customers discover more competitive prices, many utilities remain saddled with the costs of uneconomic plant and power purchase contracts approved under regulation. They seek compensation for these costs, but the amount deserves a close examination.

Some utilities seek remuneration that exceeds the market value of their common stock. Such a settlement seems overly generous for investors, who will continue to own their shares after the payoff.

And why policy on

stranded costs defies

a traditional legal or

economic analysis.

There are sound economic reasons why policymakers should allow electric utilities to recover stranded costs through a competitively neutral network access charge, or some similar fee. First, differences in the quality of utility management appear to have contributed little to differences in electricity rates among states.

Nine Southwestern electric utilities are investigating the feasibility of establishing a regional independent system operator.

The Desert Southeastern Transmission and Reliability Operator (Desert STAR) would be the name of the new ISO. Initial members would include: Arizona Electric Power Co-op; Arizona Public Service Co., El Paso Electric Co., Nevada Power Co., Public Service Co. of New Mexico, Salt River Project, Texas-New Mexico Power Co., Tucson Electric Power Co., and the Western Area Power Administration's Desert Southwest Region.

Sound bites from state and federal regulators.

Gas Supply Affiliates. Arkansas oks plan by Arkla to continue to rely on NorAm Gas Transmission Co. (an affiliate) for the bulk of its supply requirements, but directs the utility to evaluate its supply options and to "be prepared" to shift to an independent supplier for gas inventory and capacity. NorAm agreed to "rachet-down" its price to meet third-party offers. Docket No. 95-401-U, Order No. 34, Jan. 9, 1997 (Ark.P.S.C.).

Electronic Billing. Michigan regulators approve program by Consumers Power Co.

Oglethorpe Power Corp. recently completed an extensive restructuring that transformed the generation and transmission power cooperative into three specialized companies better able to compete in a restructured electric market.

In addition, the company's board of directors has approved a deal that would allow Morgan Stanley Capital Group to supply Oglethorpe Power Co. one-half of its power needs for up to eight years. The deal has been presented to the 39 Electric Membership Corporations (EMCs) for final approval.

Tightens postings rules for transmission discounts; expands jurisdiction on stranded costs in municipal annexations.

The Federal Energy Regulatory Commission on Feb. 26 revisited its Order 888 open-access transmission decision, reaffirming its core framework but making changes by granting rehearing on two key issues.

Stranded-cost recovery associated with municipal annexation was revisited. In addition, the FERC updated the discounting of transmission services (See, Order 888-A, Docket Nos. RM95-8-001, RM94-7-001, and RM95-9-001).

As I leave the electric utility business after 28 years as an engineer and analyst I would like to relate some thoughts on what makes this business special, even as it gives way to competition. Let me offer some advice to "local" electric utilities on how to keep at bay the "Mega Marketers" and "PanElectrics" of the world, who will soon appear to romance away their customers. Keep your "home-field advantage." Capitalize on your traditional strengths and enduring relationships. These bonds represent a wealth of goodwill earned over years of working with customer communities.

Two months ago in this space, I interviewed a power marketer and an independent power producer who sit on the operating and engineering committees of the North American Electric Reliability Council. What did they think of NERC, a group formed to prevent large-scale power outages and made up largely of volunteers from investor-owned electric utilities? Were they treated fairly? Did they have a chance to influence policy?

In general, my two "outsiders" felt satisfied with their status on the committees, though some skepticism emerged about NERC's internal decision-making process.