Fortnightly Magazine - November 1 1995


Is Too! Is Not!

In the August 1995 Mailbag, Mr. Michael Yokell claims our May 15, 1995, article ("It Ain't in There: The Cost of Capital Does Not Compensate for Stranded-cost Risk") "is simply wrong" and "nonsensical on its face" because we fail to distinguish between the cost of capital before and after the stranded-cost issue arose.

In fact, it is Mr.

Utility Impedes Competition in Ohio

The Ohio Public Utilities Commission (PUC) has concluded that an Ohio Edison Co. contract to provide thermal cooling service to the Mahoning County Jail, at revenues below the actual cost of providing service, was negotiated for the purpose of destroying competition. A competing thermal services company, Youngstown Thermal Limited Partnership, had alleged that Edison proposed to engage in the cooling business without PUC authorization and at a below-cost rate that violated PUC rules.

N.Y.'s Pataki: Dissolve LILCO

New York Gov. George E. Pataki wants Long Island Lighting Co. (LILCO) dissolved to reduce electricity rates on Long Island. LILCO presently has the second-highest residential rates in the nation (Maui Electric Co.'s are highest) (em 16.8 cents per kilowatt-hour (›/Kwh), compared to the national average of just 8.8›/Kwh. Pataki has asked the Long Island Power Authority (LIPA) to draw up a plan that: 1) cuts rates in Nassau and Suffolk counties, 2) cuts rates by "double digits,"

3) protects Long Island residents from any property tax hikes, and 4) increases competition.

Retail Wheeling Rates Upheld

The Michigan Public Service Commission (PSC) has denied requests to modify its newly instituted retail wheeling experiment (see 161 PUR4th 441). However, the PSC did clarify its ruling to permit a form of "self-service" wheeling by the Dow Chemical Co. (em a limited partner, along with Consumers Power Co., in the Midland Cogeneration Venture (MCV). Dow had asked the PSC for an exemption from restrictions on participation by utility affiliates as third-party providers in their own service territory.

Texas Outlines Access, Comparability Terms

The Texas Public Utilities Commission (PUC) has issued its proposal for achieving electric transmission access and full wholesale competition (Project No. 14045).To achieve comparability, all utilities would be required to use their own transmission systems for all purposes at the same prices and under the same terms and conditions they apply to third-party transmission customers.

R.I.: Competition Must Reduce Rates for All

Working to identify a set of specific issues for consideration in its investigation of competition and open access for the electric industry, the Rhode Island Public Utilities Commission (PUC) has refused to permit additional costs for environmental improvements and the development of renewable resources.

Ohio Edison Rate Proposal Worth Watching

Ohio Edison Co. has asked the Ohio Public Utilities Commission (PUC) to reduce rates and cap base rates until 2006, thereby extending its present rate freeze for an additional 10 years. The plan, which is supported by the Office of Consumers' Counsel and the Industrial Energy Users-Ohio, would decrease base rates, currently frozen at 1990 levels, by almost $600 million over the next 10 years. Residential and small business rates would decrease by $1 a month until January 1, 2001, and by $1.50 per month thereafter.

Virginia Investigates Restructuring

The Virginia Corporation Commission has launched a formal investigation of electric industry restructuring and emerging competition (Case No. PUE950089), focusing on reliability, continuity and stability of rates, fairness to customers and investors, and whether truly competitive markets can be developed.

Time Warner Hits Local Telephone Markets

The Ohio Public Utilities Commission (PUC) has approved an application by Time Warner Communications of Ohio, L.P. to operate as a local exchange carrier in 37 counties in the state. The communications company already

provides cable television service in most of the counties. The PUC will wait to authorize the company to begin switching telephone calls until a separate docket resolves a number of generic issues associated with the advent of competition in the local telephone market.