Fortnightly Magazine - October 1 1995

Fla. Updates Water ROEs

In a preliminary ruling, the Florida Public Service Commission (PSC) has proposed several changes to its rules for setting a generic rate of return on common equity (ROE) for water utilities. The proposed leverage formula produces a suggested ROE range of 10.18 to 11.88 percent, based on an equity ratio of 40 percent. The change represents an increase of 55 basis points over the midpoint indicated by the existing formula. According to the PSC, the update incorporates changes in underlying market conditions, including bond yields and required rates of return.

Gas Wary of Electric IRP/DSM

The American Gas Association (A.G.A.) has issued A Strategic Guide to IRP and DSM for Natural Gas Companies, prepared by Hampton Strategies, Inc. Because the evolution of IRP and DSM initiatives for electric and gas companies will be greatly affected by increased competition, the report contends, natural gas companies need to be familiar with issues and practices surrounding DSM cost recovery and profitability incentives.

Montana and Iowa Reject EPAct Section 115

The Montana Public Service Commission (PSC) has decided not to adopt federal standards for natural gas integrated resource planning (IRP) and demand-side management (DSM) contained in section 115 of the Energy Policy Act of 1992 (EPAct), concluding that current information did not support establishing formal standards in those areas. The PSC explained that the expected costs of future commission involvement in the matter outweigh the benefits that might reasonably be expected at this time. Re Section 115, Energy Policy Act of 1992, Order No. 5861, Docket No. 94.9.42, Aug.

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