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Fortnightly Magazine - July 15 1995

Two More States Launch Electric Restructuring

Utility regulators in Minnesota and Nevada have opened dockets on electric utility restructuring, citing (Minnesota) the Energy Policy Act of 1992 as having lifted barriers to wholesale competition, and seeking (Nevada) recommendations on alternative ratemaking.

The Minnesota Public Utilities Commission (PUC) said it would view open competition as "one part of a continuum of possible change," from traditional vertical integration to full deregulation.

Byline: 
Phillip S. Cross
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DSM Phase-out Ordered for LDCs

The Massachusetts Department of Public Utilities has decided to phase-out existing demand-side management (DSM) incentives for the state's natural gas local distribution companies (LDCs). It said that any claims by LDCs for future recovery of lost margins and incentives will be examined in light of changes in the gas industry and the DSM marketplace. It added that the LDCs should propose a phase-out of their lost margin and DSM incentive programs in conjunction with proposals for incentive-based ratemaking or in their future DSM cases. Re Boston Gas Co., D.P.U. 94-15, Apr.

Byline: 
Phillip S. Cross
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California Extends Incentive Rate Plan

The California Public Utilities Commission has issued a "positive" performance rating for the first year of a two-year, experimental performance-based rate program for San Diego Gas and Electric Co.'s gas procurement and electric generation and dispatch activities. It extended the plan another year, to facilitate the second year's annual review, and said it expects the plan to stay in place "well into the third year" of the trial. Re San Diego Gas & Elec. Co., Decision 95-04-051, Applica. 92-10-017, Apr. 26, 1995 (Cal.P.U.C.).


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Byline: 
Phillip S. Cross
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Court Upholds FERC's PBOP Ruling

The U.S. Circuit Court of Appeals for the District of Columbia has upheld a Federal Energy Regulatory Commission policy allowing utilities to recover costs to switch from cash to accrualaccounting for post-retirement benefits other than pensions (PBOP) under SFAS 106.

Byline: 
Phillip S. Cross
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Georgia Sets Rules on Price-cap Requests

The Georgia Public Service Commission has completed the first step required to implement the state's Telecommunications and Competition Development Act of 1995 (which mandates changes in telephone regulation) by issuing rules for local exchange carriers seeking to abandon traditional rate regulation in favor of alternative performance-based rate plans, including price caps. It issued separate filing requirements to obtain certificates for competitive local exchange service (also permitted under the new state law).

Byline: 
Phillip S. Cross
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NYNEX Gets Price Cap

The Massachusetts Department of Public Utilities (DPU) has completed a long-awaited rate plan for New England Telephone and Telegraph Co. (dba NYNEX), adopting price-cap regulation without earnings sharing, but with strong measures to protect ratepayers from monopoly pricing, investment risk, and subsidies of utility ventures. The plan also includes price floors and separates competitive and monopoly services for pricing purposes. The DPU also approved a rate freeze for basic residential service until 2001, but rejected a claim that rates should fall during that time.

Byline: 
Phillip S. Cross
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The ABCs of PBR

In the alphabet soup of regulatory acronyms, performance-based ratemaking (PBR) may help shape events well into the next century. At present, PBR is being implemented, or considered by, public utility commissions (PUCs) in over 20 states. By 2000, PBR is likely to reach most of the 50 states as well as the Federal Energy Regulatory Commission. The pressures of a global economy have raised the stakes.

Byline: 
Peter Navarro
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Otter Tail Pushes PMA Privatization Pilo

Otter Tail Power Co. (OTP) has asked to manage the operations and marketing activities of the Billings Marketing Area of the Western Area Power Administration's (WAPA) Eastern Pick-Sloan system (a multistate region). According to OTP president John MacFarlane, the proposal aims to smooth the transition to privatization.
Byline: 
Lori A. Burkhart
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Iowa PURPA Law Comes Under Firet

Midwest Power Systems Inc. (MPS) has asked the Federal Energy Regulatory Commission (FERC) to void the Iowa law requiring Iowa utilities to pay six cents per kilowatt-hour for electricity generated by qualifying facilities (QFs). MPS

argues that the Iowa price is more than twice what federal law imposes under a market-based rate. MPS and the three other investor-owned utilities (IOUs) in Iowa had asked the state legislature earlier this year to make the Iowa law conform to federal law, but the bill was not passed.

Byline: 
Lori A. Burkhart
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