Fortnightly Magazine - July 1 1995

Mailbag

T.R. Standish's letter ("NUGs Take the Cake," May 1, 1995) in response to our article ("How State Regulators Should Handle Retail Wheeling," Feb. 15, 1995) reflects the views of those who believe that the full benefits of competition in the electric power industry do not require retail competition. Mr. Standish, in fact, believes that retail competition is bad and not inevitable. We would like to address several of his points:

Reasonable people can certainly debate the inevitability of retail competition. But unlike Mr.

Palo Verde Disallowance Upheld

A Texas Court of Appeals in Austin has turned back an appeal by El Paso Electric Co. (EPE) challenging a state commission ruling that disallowed rate recovery of the utility's investment in the Palo Verde Unit 3 nuclear generating plant as excess capacity. It rejected the utility's claim that use of the plant for base-load and offsystem wholesales warranted cost recovery.

The Palo Verde disallowance had come in a 1992 commission rate order.

NERC Moves Forward with EINs

The North American Electric Reliability Council (NERC) has completed a series of workshops on what it calls "electronic information systems" (EINs). The NERC workshops were held in response to the Federal Energy Regulatory Commission (FERC) "Mega-NOPR" of March 29, which contemplates opening the wholesale electric industry to competition.

NGV Program Gets Rate Support in WVA

The West Virginia Public Service Commission (PSC) has approved a request by the state's natural gas local distribution companies (LDCs) to extend a statewide natural gas vehicle (NGV) program first approved in 1992.

IPPs Bond Within ERCOT

A new group, the Independent Power Suppliers of ERCOT (IPSE), has formed to speak for nonutility power suppliers that operate within the Electric Reliability Council of Texas (ERCOT). The stated mission of IPSE is "to promote the reliable operation of power systems within ERCOT, in which a competitive, environmentally responsible and profitable independent electric power industry can flourish." Membership is open to all nonutility generators (NUGs), cogenerators, and power marketers.

Consumers Power Must Bid for More Midland Power

The Michigan Public Service Commission (PSC) has warned Consumers Power Co., an electric utility, that the utility may only take more power from its affiliated Midland Cogeneration Venture (a qualifying cogeneration facility) through a competitively bid capacity solicitation.

Moody's: Co-op Credit Strength Will Decline

Moody's Investors Service has released a report, Moody's Outlines Risk Profile for Electric Cooperatives, which finds that the era of deregulation will lead to an average credit quality decline for generation and transmission cooperatives (G&Ts), just as it will for investor-owned utilities (IOUs) over the next five to 10 years. The report stresses that both G&Ts and distribution cooperatives face increased business and financial risks.

Michigan PSC Oks Flexible Tariffs

The Michigan Public Service Commission (PSC) has rejected allegations that flexibly priced tariffs for electric service are unlawfully discriminatory under state law. The ruling opens the way for Consumers Power Co. to impose a new Special Competitive Services (SACS) tariff. The new SACS rate would allow Consumers to negotiate onpeak billing demand and energy charges within a range of rates for customers with a less expensive alternative energy source.

Niagara Mohawk Appeals Sithe Case

Niagara Mohawk Power Co. (NiMo) has appealed a New York Public Service Commission (PSC) order upholding its purchased-power contract with Sithe Energies. In a series of decisions, the PSC had allowed Sithe to sell electricity from the 1,040-megawatt Independence plant to two NiMo customers: Alcan Rolled Products and Liberty Paperboard. In April 1994, the PSC ruled that if Sithe were to sell electricity at retail it would be lightly regulated.

Local Telephone Competition Heats Up

The Michigan Public Service Commission (PSC) will allow MFS Intelenet of Michigan to compete with Ameritech Michigan in the Detroit and Ann Arbor area exchanges. The PSC said state telecommunications law supports competition and that the applicant was qualified to enter the business. It rejected claims that the certificate should be denied due to concerns over possible cross-subsidization between the applicant and its holding company, MFS Communications Co. According to the PSC, consumers were well protected from such abuses under existing regulations.