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Fortnightly Magazine - March 15 1995

Gas May Find New Futures in Kansas

The Kansas City Board of Trade has asked the Commodity Futures Trading Commission (CFTC) to approve a natural gas futures and options trading contract for a summer launch. The designated delivery point is the Permian/Waha Hub in West Texas, operated by Valero Transmission Co. Kansas City Board chairman Don Hills says the western gas futures contract is necessary because gas prices differ significantly across the country, due to seasonal weather extremes and the diverse origins of supply.

Byline: 
W. Lynn Garner
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Financial News

The process of determining how to implement utility competition is often cast as a struggle between two opposing camps: shareholders and ratepayers. There are, of course, two other major players, managements and regulators. The bipolar view tacitly assumes that shareholder and management interests coincide, and that regulators have customer interests at heart. Neither assumption is altogether valid. Shareholder interests deviate from management interests in important ways, just as the interests of the entrenched regulatory bureaucracy diverge from the public interest.

Byline: 
Charles M. Studness
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Nuclear Waste Still Home Less

The Mescalero Apache Tribe has rejected a proposal by a consortium of electric utilities to create a temporary nuclear waste storage site on tribal lands in Mescalero, NM. According to Northern States Power Co. chairman James Howard, the coalition will increase its efforts via federal legislation, or its lawsuit against the Department of Energy: "While we are encouraged by recent industry legislative developments, we also are hopeful that the new spirit being expressed by the members of the 104th Congress will refocus attention on a monumental consumer problem." (em LB

Byline: 
Lori A. Burkhart
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Making Sense of Peak Load Cost Allocations

Usage of utility services is rarely uniform across the day, month, or year. Dramatic increases in loads often appear at particular times of the day or in particular seasons of the year. Telephone utilities may choose not to meet extreme peak demands, but electric, natural gas, sewer, and water utilities usually do not enjoy that option. Failure to meet peak demands can lead to catastrophic consequences for both the customer and the utility, and can draw the attention of regulators.

Byline: 
Thomas Michael Power
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Williams to Pump Cash Into Transco

To further their pending merger, the Williams Companies Inc. has offered to reduce Transco Energy Co.'s cost of capital via a $950-million shot in the arm. The merger will create the second biggest U.S. pipeline company in terms of pipeline miles, but the largest in terms of gas delivered (about 4 trillion British thermal units annu-ally). The recapitalization plan, however, must first be approved by the Securities and Exchange Commission.

Byline: 
W. Lynn Garner
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Court Reject FCC's Flexible Pricing Again

The Federal Communications Commission (FCC) has been rebuffed yet again by the courts in its effort to relax tariff filing requirements for nondominant common carriers. The U.S. Court of Appeals for the District of Columbia Circuit thwarted the FCC's latest attempt, rejecting proposed rules that would permit the nondominant carriers to file a range of rates rather than fixed rates tied to a schedule of charges.

The courts had earlier overturned a series of FCC rulings.

Byline: 
Phillip S. Cross
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Houston Industries Catches Moody's Eye

Moody's Investors Service has placed the Baa2 long-term credit rating of Houston Industries Inc. (HII), parent company of Houston Lighting & Power (HL&P), under review for possible upgrade. The main catalyst is HII's January agreement to sell its cable television assets valued at $2.24 billion in exchange for cash and securities to Time Warner Inc. Another factor is HL&P recent settlement with the city of Houston in its rate proceeding. Although it includes a $367-million annual rate reduction, Moody's says the settlement will have "minimal impact" on the utility's credit rating.

Byline: 
W. Lynn Garner
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Florida Approves Decoupling Mechanisms

Florida Power Corp. has won approval for a three-year experiment to remove existing disincentives to investment in conservation programs by "decoupling" residential revenues from sales for ratemaking purposes. The mechanism permits customer surcharges and refunds if revenue levels vary from targeted levels.

The new mechanism relies on a per customer revenue target figure based on the allowed revenue and average residential customer count used in the company's last rate case.

Byline: 
Phillip S. Cross
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IBM Takes on Utility Partner

Public Service Co. of Colorado (PSCC) and IBM have announced a strategic alliance. IBM's subsidiary, Integrated Systems Solutions Corp. (ISSC), and a new PSCC subsidiary, e prime, will develop and deliver new information technology applications to improve utility customer service. E prime's first project will be to help IBM develop a natural gas procurement strategy to reduce energy costs and improve the quality and reliability of its energy services. ISSC will manage most of PSCC's information technology systems and network infrastructure.

Byline: 
Lori A. Burkhart
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Court Limits State Review of QF Buyouts

The U.S. Court of Appeals for the Third Circuit has ruled that the New Jersey Board of Public Utilities (BPU) is preempted under the federal Public Utility Regulatory Policies Act (PURPA) from ordering a qualifying facility (QF) and an electric utility to renegotiate or settle on a buy out of a previously approved purchased-power agreement. The QF, Freehold Cogeneration Associates, L.P. had refused to alter its contract with Jersey Central Power & Light Co.

Byline: 
Phillip S. Cross
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