Fortnightly Magazine - March 15 1995

SEC Cost Approves Valid for FERC

The U.S. Court of Appeals for the Sixth Circuit, following an earlier decision by the District of Columbia Circuit, has rejected claims by Ohio municipal utilities that the Federal Energy Regulatory Commission (FERC) erred when it allowed Ohio Power Co. to recover the full cost of coal paid to affiliated suppliers without applying a "comparable market test" to make sure the costs were reasonable.

Who Will Regulate PoolCo-the FBI?

Eugene P. Coyle works as an energy analyst for Toward Utility Rate Normalization (TURN), a consumer advocacy group in California that claims 30,000 members.

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The January mini-forum failed to discuss a key underlying assumption made by PoolCo proponents. The assumption is that price competition will really exist in tomorrow's wholesale electric market.

Coal Change Fuels VP/DRi Dispute

Virginia Corporation Commission staff have discovered that Virginia Power Co. (VP) customers overpaid $11 million for fuel under a renegotiated coal-hauling contract with CSX Transportation. Without corrective action, VP would continue to bill ratepayers for excessive fuel payments through 2000, when the contract expires.

DSM Rate Surcharge Remanded in PA

The Pennsylvania Commonwealth Court has overturned and remanded parts of a ruling by the Pennsylvania Public Utility Commission (PUC) that allows electric companies to impose rate surcharges to recover costs associated with demand-side management (DSM) programs, including lost revenues and incentives for program performance. The court ruled that state law limits recovery of incentives or the costs of physical facilities to base rate proceedings.

PoolCo, Bilateral Trading, and Technology

Alex Henney is associated with Energy Economic Engineering Ltd. in London, and has consulted in many countries. As early as February 1987, Henney advocated competitively restructuring the electricity supply industry and incorporating a pool as a real-time spot market. He is the author of A Study of the Privatisation of the Electricity Supply Industry in England and Wales.

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Last year, the Norwegian Market Co. decided to stick with bilateral trading and a spot market.

Centerior Plans to Fire Up Plants

Centerior Energy Co. (CE) has signed a power-marketing agreement with Citizens Lehman Power L.P. to make long-term power sales outside of CE's Northern Ohio service territories. CE will make available 550 megawatts of generating capacity from five presently idle fossil-fuel plants. This capacity will support the development of a number of "creative" wholesale power sales packages. The plants, owned by CE subsidiaries, are Cleveland Electric Illuminating Co.'s Lake Shore Plant and Toledo Edison's Acme Station. (em LB

W. Lynn Garner is senior writer and Lori A.

D.C. Has Second Thoughts About Transition Costs

The District of Columbia Public Service Commission (PSC) will permit Washington Gas Light Co., a natural gas local distribution company (LDC), to continue collecting Order 636 pipeline transition charges through its purchased-gas adjustment clause (PGA), but "questions" whether the costs should become a standard PGA element. The PSC set the matter aside for further review, voicing concern over the "potentially unchecked magnitude" of the costs absent regulatory oversight.

Industry Structures and Market Mechanisms

By Seabron AdamsonSeabron Adamson is senior consultant with London Economics Ltd., a consulting firm for the private sector. A native of Georgia, Mr. Adamson joined London Economics in 1992 and currently resides in the United Kingdom.

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The debate over "PoolCo" vs. bilateral contract markets is a question of market mechanism, or how transactions can be made while recognizing the realities of power systems.


Following Congressional approval of the Energy Policy Act of 1992 (EPAct), Rep. Ed Markey (D-MA), a key sponsor of the bill's electricity title, predicted that "competition should replace monopolism as the rule for much of the power industry. Consumers, renewable energy, and the environment will be much the better for it."

Since then, however, Markey's vision has fallen under a cloud.

CATV Exclusive Franchise Upheld

The U.S. Court of Appeals for the Sixth Circuit has ruled that the Cable Television Consumer Protection Act of 1992 (Cable Act) does not invalidate existing exclusive franchises for local cable television service. The case involved a Tennessee municipality that sought to establish its own cable system, claiming that the Cable Act abrogated the exclusive franchise it had previously granted to a private company.