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Fortnightly Magazine - January 15 1995

APPA Asks NARUC to End Rate Secrecy

In a letter to Ronald Russell, chair of the Electricity Committee of the National Association of Regulatory Utility Commissioners, Larry Hobart, executive director of the American Public Power Association, argues that investor-owned utilities should not be allowed to keep rates confidential. Hobart says that rate secrecy destroys electric industry competition and that secret sales are a form of predatory pricing barred by antitrust law. He also claims that secrecy violates consumers' right to know if they are paying their fair share of utility costs.

Byline: 
Lori A. Burkhart
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Rhode Island Reviews Adjustment Clause Plan Incentives

The Rhode Island Public Utilities Commission (PUC) intends to open a proceeding to consider the effect of fuel-adjustment clauses on utility incentives to reduce customer costs, finding that the passing through to customers of generating fuel costs may create a disincentive to supply-side efficiency.

The Energy Policy Act of 1992, amending section 111(d) of the Public Utility Regulatory Policies Act, requires states to consider electric utility investment in efficiency improvements at generation, transmission, and distribution facilities by October 24, 1995.

Byline: 
By Phillip S. Cross
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Privatization Knocks

The timely article on Central America and the Caribbean by Lee M. Goodwin (Nov. 15, 1994) omitted to mention the privatization potential of the region's utility systems. For example, Grenada recently privatized 50 percent of its utility, GRENLEC, and Trinidad and Tobago has privatized electric generation. These alternatives to "greenfields" project development deserve attention from U.S. developers as well. In any case, based on my experience, I would certainly echo Mr.

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FERC Orders Comparable Rates for Texas Utilities

The Federal Energy Regulatory Commission (FERC) approved a final order requiring Texas Utilities Electric Co. (TU) and its affiliate, Southwestern Electric Service Co., to provide network transmission service to Tex-La Electric Cooperative of Texas Inc. (Docket No. ER94-1385-000). Network service allows multiple points of receipt and delivery at a single system rate. Tex-La, a customer of Texas Utilities and a bulk-power supplier for seven distribution cooperatives in Texas, is seeking to buy power from third parties and transmit the power over TU's transmission system.

Byline: 
W. Lynn Garner
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Vermont Approves Telco Price-cap Plan

The Vermont Public Service Board (PSB) has approved an alternative price regulation plan (PRP) for New England Telephone Co. (NET), while reducing its rates by 9.56 percent (about $15 million) per year, and ordering a $11.5-million rate refund. (Under state law, NET is not required to accept the price regulation plan.

Byline: 
By Phillip S. Cross
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Ratings Reveal Risk

In an interesting article (Oct. 15, 1994), Professor Brooks Marshall suggests that bond ratings are a poor predictor of equity risk, based on a regression of utility risk measures on measures of utility bond ratings. For utility variables, he used 1) stock beta and 2) risk premiums based on analysts' expected forecasts. For bond rating measures, he used 1) average yields for various classes of bonds and 2) a numerical ranking.

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FERC Clarifies Gas Gathering Policy

The Federal Energy Regulatory Commission (FERC) has clarified the terms and conditions for default contracts designed for use on an interim basis when disputes arise over the sale or spinoff of pipeline-affiliated gas gathering systems.

Byline: 
W. Lynn Garner
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Electric Utility Penalized for Power-Supply Strategy

Citing an excessive commitment to increasingly expensive purchased-power contracts, the Vermont Public Service Board (PSB) has reduced allowed rate of return on equity by 75 basis points. In setting rates for Central Vermont Public Service Corp., the PSB explained that ratepayers should not bear all of the costs associated with 1) excessive power commitments; 2) a failure to fully explore return sales opportunities; and 3) inefficient energy-efficiency programs.

Byline: 
By Phillip S. Cross
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