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Fortnightly Magazine - October 15 1995


Bruce W. Radford

And wires in the air. Together they form the interstate natural gas pipelines and the electric transmission grid. When the talk turns to deregulation, whether on the gas or the electric side, the pipelines and the transmission grid are almost always voted "most likely to." That is, to remain regulated monopolies (em with cost-of-service rates protected by the Federal Energy Regulatory Commission (FERC).

Let's have a look at that idea.

The FERC has unbundled gas commodity sales from pipeline transportation.

Maryland Opts for "Measured" Restructuring

Phillip S. Cross

The Maryland Public Service Commission (PSC) has completed its investigation of market competition and regulatory policies for the electric industry. The PSC chose a "measured approach," ruling against retail wheeling at this time while permitting, but not requiring, utility proposals for performance-based ratemaking.

The PSC described electricity rates in the state as "globally competitive," noting that Maryland's utilities were not encumbered by a lot of expensive nuclear power plants or high-cost cogeneration contracts.


Joseph Santaniello has been named director of management information systems for NUI Corp. He was previously director of engineering at Elizabethtown Gas, NUI's New Jersey operating division. Stephen Liaskos, formerly controller at Metallgesellschaft Corp., joins NUI as controller. Michael A. Palecki, most recently of the Florida Public Service Commission, has been named v.p. of regulatory affairs for NUI's southern division.

BICC Utility Cable Co.

Iowa Issues Gas Price-hedging Guidelines

Phillip S. Cross

Concluding its inquiry into the use of financial derivatives by the state's natural gas local distribution companies (LDCs), the Iowa Utilities Board (UB) has given utilities the burden of showing that financial transactions are not "overly speculative." At a minimum, the UB expects an LDC's financial position to be "clearly associated with a physical quantity of gas purchased at indexed prices." When discerning between hedging and speculating in a swap transaction, an LDC must show that the swap includes the same quantity, duration, and pricing reference point as the physical gas.


Nice Try!American Gas Association president and CEO Michael Baly's response to my article ("Electric Reliability: How PJM Tripped on Gas-fired Plants," May 1, 1995) concerning the January 19, 1994, rolling blackouts in the PJM power pool is damage control that fails. Here are the facts that Mr. Baly either ignores or distorts:

Forty percent of PJM's coal generation did not operate during the rolling blackouts. At least 80 percent of PJM's total generation where gas was the primary or sole fuel did not operate when needed.

Colorado Opens LEC Market

Phillip S. Cross

The Colorado legislature has enacted a new law designed to increase competition in the state's local telecommunications market (H.B. 95-1335). The statute directs the Colorado Public Utilities Commission (PUC) to remove all barriers to entry into the local telecommunications market "as soon as is practicable." State regulators are encouraged to use "interim marketplace mechanisms" where competition is not immediately possible, with the ultimate goal of replacing the existing regulatory framework with a fully competitive state telecommunications market.

Utilities to Pool Power, Resources

Lori A. Burkhart

General Public Utilities Corp. (GPU) and New Jersey Resources Corp. (NJR) have announced a pooling plan to manage the natural gas supply and capacity portfolios for up to 25 gas-fired generating stations that supply the GPU system in New Jersey and Pennsylvania. The pool will contain up to 1,100 megawatts of nonutility generation presently under contract with the GPU companies, as well as the companies' own generation. NJR will procure gas and provide other fuel-management services in conjunction with GPU system power dispatchers.

Federal Appeals Court Upholds EWG Safe Harbor Regs

Phillip S. Cross

Turning back a challenge by the National Association of Regulatory Utility Commissioners (NARUC), the U.S. Court of Appeals for the District of Columbia Circuit has upheld federal regulations relaxing scrutiny of investments in exempt wholesale generators (EWGs) by electric utility holding companies.

Minnesota Coalition Joins Debate

Lori A. Burkhart

A broad coalition of Minnesota electric cooperatives, municipal utilities, consumer advocates, and environmentalists has joined the debate over the restructuring of the state's electric industry.

TEP's Holding Co. Status on Hold

Lori A. Burkhart

The staff of the Arizona Corporation Commission have recommended rejection of a Tucson Electric Power Co. (TEP) proposal to form a holding company, with TEP becoming a wholly-owned subsidiary. The proposal reflects TEP's desire to pursue opportunities in the domestic and international power markets, including development of independent power projects, acquisition of interests in existing power facilities privatized by foreign governments, and construction of cogeneration facilities to serve the energy needs of large industrial customers.