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Fortnightly Magazine - November 1 1995

LDC Shifts Stranded Demand Costs

The Minnesota Public Utilities Commission (PUC) has authorized Northern Minnesota Utilities, a natural gas local distribution company (LDC), to insulate shareholders from the effects of losing a large firm sales customer by reallocating associated demand costs among remaining firm customer classes. It allowed the LDC to pass the increased costs through its purchased adjustment clause, finding that the utility was now alerted to the problem and had taken action to protect itself and its ratepayers from stranded costs caused by customers switching to interruptible transport service.

Byline: 
Phillip S. Cross
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Electric Restructuring: An Urgent Proposal

Technological advances in electric generation and telecommunications make utility competition both possible and inevitable. These economic forces will eventually break down the regulatory structure of the electric industry. However, public policy should play a crucial role in molding and nurturing competition.In recent months, regulators in a majority of the states have opened proceedings to study electric competition.

Byline: 
Charles Studness
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Off Peak

Companies: BRAZ (Brazos Electric Cooperative); COA (City of Austin); CPL (Central Power & Light); CPS (Central Public Service); GSU (Gulf States Utilities); HLP (Houston Lighting & Power); LCRA (Lower Colorado River Authority); SPS (Southwestern Public Service); SWEP (Southwestern Electric Power); TNP (Texas New Mexico Power); TU (Texas Utilities Electric); WTU (West Texas Utilities).Assumptions: Statewide economic dispatch, where all utilities receive the market-clearing marginal energy cost for their generation (similar to studies that Moody's Investors Service has

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Frontlines

Suppose you want to reduce emissions

of carbon dioxide to lessen the chance

of global warming. Should you (a) prohibit coal burning in electric power plants, (b) encourage coal use for power generation, or (c) force electric generators to pay an "externality" surcharge to reflect the cost of CO2 emissions?Here's another one. You are an independent power producer.

Byline: 
Bruce W. Radford
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Otter Tail Decries Public Power Bids

The Natural Gas Competitiveness Act of 1995 has been introduced in the U.S. House of Representatives. Authored by Reps. Lamar S. Smith (R-TX) and John Bryant (D-TX), the bill would give independent producers an opportunity to avoid antitrust laws and join together in cooperatives to market their natural gas directly to the end user.

"Forty percent of the natural gas produced in the United States is by small, private companies with fewer than 10-15 employees," said Denise Bode, president of the Independent Petroleum Association of America.

Byline: 
Lori A. Burkhart
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People

Dan W. Reicher was named acting assistant secretary for policy at the U.S. Department of Energy. Reicher has served as deputy chief of staff and counselor to Secretary of Energy Hazel R. O'Leary since 1993 and was a member of the Clinton-Gore transition team. Reicher replaces Jack Riggs, who left to take a senior position at the Aspen Institute.PECO Energy Co. selected William H. Smith III as v.p. and group executive of its new Telecommunications Group. Stepping into his seat as nuclear support v.p. is Drew Fetters.

James H.

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Md. Rejects Restrictions on Diversification

The Maryland Public Service Commission (PSC) has decided against requiring regulated utilities to obtain prior approval for nonutility activities or diversification plans. The PSC also rejected a proposal that utilities pay a royalty to consumers of regulated services to account for

intangible benefits gained by the unregulated subsidiaries. The case involved complaints regarding merchandise and appliance services provided by Baltimore Gas and Electric Co. (BG&E).

Byline: 
Phillip S. Cross
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Mailbag

What's in a Name?

Charles Studness's article "CPUC Chooses Reregulation over Deregulation" (Financial News, July 15, 1995) reminds me of Humpty Dumpty's scornful remark in Lewis Carroll's Through the Looking Glass: "When I use a word, it means what I choose it to mean (em nothing more nor less."

When Studness discusses "deregulation," it is clearly what he chooses it to mean (em not what the California Public Utilities Commission (CPUC) proposes in its May 24 majority decision on deregulating the electric utility industry.

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Wash. Champions Ratepayers Over Competition

The Washington Utilities and Transportation Commission (UTC) has issued an interim policy statement in its ongoing inquiry into regulatory tools to encourage the development of new resources by regulated monopoly utilities.

Byline: 
Phillip S. Cross
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