Fortnightly Magazine - August 1995

Merger Terminated: Chess Game Contines

Central and South West Corp. notified bankrupt El Paso Electric Co. (EPE) on June 9 that it has terminated the companies' proposed merger. CSW had informed EPE on May 23 that it had breached the merger agreement by participating in discussions about and spending large sums on a possible stand-alone reorganization plan.

The CSW board of directors rejected EPE's request to extend the merger agreement for six months until December 8.

North Dakota Approves Certificates in Local Exchange Site

The North Dakota Public Service Commission (PSC) has approved new certificates for local telephone service for 68 exchanges sold by U S WEST Communications, Inc. to a group of independent telephone companies in the state. The PSC had prepared to perform a full examination of the $137.5-million sale, when the state legislature passed a new law eliminating its jurisdiction over the disposition of tangible assets by U S WEST.

Michigan Gets Retail Wheeling Rates

The Michigan Public Service Commission (PSC) has set rates and charges for delivery service for a five-year experimental retail wheeling program involving Detroit Edison Co. (DE) and Consumers Power Co. (CP). The program will be implemented the next time the utilities solicit new capacity (Case No. U-10143/10176). The ruling follows an April 11, 1994, PSC order approving the framework for the retail wheeling experiment. The rates pertain to industrial customers with 5 megawatts of retail delivery capacity that use about 3 million kilowatt-hours (Kwh) of electricity per month.

Nuclear Storage at Issue iin Minnesota Decommissioning Case

The Minnesota Public Utilities Commission (PUC) has reaffirmed an earlier decision

allotting another

14.8 years of service to two Prairie Island nuclear units owned by Northern States Power Co. The PUC turned back claims that it should shorten the remaining life estimate because the utility might be unable to secure offsite storage for spent fuel from the plant.

UPA Tries to Snag LILCO

The Long Island Power Authority (LIPA) plans to acquire the Long Island Lighting Co. (LILCO), to help reduce LILCO's high electric rates and improve Long Island's economy. To that end, LIPA has formed a public/private partnership with a private utility company that will provide extensive management services for LILCO. The utility partner has agreed to invest $100 million in the acquisition, contingent upon Gov. Pataki's approval. LIPA would create a subsidiary to acquire LILCO using tax-exempt bonds.

New Jersey Approves Gas to Electric Pricing

The New Jersey Board of Public Utilities (BPU) has approved a change in the method used by Public Service Electric and Gas Co. to determine the price of gas paid by its electric division to its gas division for volumes needed to generate electricity. The new method adds two types of service beyond the current all-interruptible classification. The new "dedicated" volumes will only be subject to interruption at temperatures of 20 degrees or below. In addition, demand charges will be estimated based on monthly volumes rather than fixed historical annual volumes.

PSI Energy Offers Customer Choice

PSI Energy has filed a proposed tariff with the Indiana Utility Regulatory Commission (URC) that would allow new and expanding businesses in its service territory to choose their power supplier if their electric use increases to two megawatts or more. PSI said the tariff would give qualifying businesses access to the national electric market. It expects the URC to decide by the spring of 1996.

Arkansas Approves Fuel Clause Treatment for Test Energy

According to the Arkansas Public Service Commission (PSC), the Arkansas Electric Cooperative Corp treated ratepayers fairly when it used its fuel adjustment clause to recover the value of test energy produced at one of its hydroelectric facilities. The PSC rejected a claim by its staff that the recovery was misplaced because no fuel costs were actually incurred for generating the test energy. The PSC said the co-op deserved a credit for the value of the energy because the value of the hydroelectric plant would be reduced by the same amount under the approved accounting treatment.

Wisconsin Aims for Municipal Tax Fairness

The Wisconsin Public Service Commission (PSC) has initiated a rulemaking to introduce an alternative method of calculating the tax equivalent for municipal utilities. The tax equivalent is calculated annually and represents the amount of money a municipal utility pays directly into the municipality's general fund. The rulemaking responds to concerns that the tax equivalent was excessive when compared to the gross receipts taxes paid by investor-owned utilities.

Mass. Requires Innovative Financing for Water Plant

The Massachusetts Department of Public Utilities (DPU) has granted preliminary approval to a water utility's proposal to "project finance" the cost of a new treatment facility required to comply with federal and state laws. The utility, Massachusetts-American Water Co., had proposed forming a special purpose corporation solely to finance the plant. The new corporation would lease the facility to the utility, using the payments to repay tax-exempt bonds issued under the financing plan.