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Fortnightly Magazine - January 15 1996

LDCs Test Supply-cost Incentive Mechanisms

The New York Public Service Commission (PSC) has approved its first market-indexed incentive mechanism to encourage a local distribution company (LDC) to control gas-supply costs. Brooklyn Union Gas Co.'s modified proposal for a one-year pilot incentive mechanism employs an external index as a gas-cost target (the monthly closing natural gas contract price on the New York Mercantile Exchange), rather than a series of internal cost measures based on estimated fixed and variable costs.

Byline: 
Phillip S. Cross
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Two Penn. Utilities Offer Restructuring Proposal

In the second phase of the Pennsylvania Public Utility Commission's (PUC's) investigation into electric industry restructuring, Metropolitan Edison (ME) and Pennsylvania Electric (PE) have proposed a regional wholesale electricity market based on the Pennsylvania-New Jersey-Maryland power pool. All electric generators would sell into the market, which would function as a spot market, while accommodating bilateral contracts.

The pool would coordinate all power sales and purchases to assure the reliability and integrity of the regional electric grid.

Byline: 
Lori A. Burkhart
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Off Peak

Privatizing the grid doesn't appear to have hurt the United Kingdom any. Quite the contrary. When it comes to electricity, at least, Britannia still rules to some extent.

Industrial prices in the United Kingdom continue to be among the most competitive in the world, according to an Electricity Association (EA) survey. Industrial contract prices are now 49 percent cheaper than in Japan, and 41 percent less than in Germany. Average prices in Italy, Spain, and the United States are also more expensive.

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PacifiCorp to Buy Australian Utility

PacifiCorp's wholly-owned subsidiaries, PacifiCorp Holdings, Inc. and PacifiCorp Australia Holdings Pty Ltd., have agreed to purchase Powercor, an electric utility in southeast Australia, for about $1.6 billion. Powercor is one of five distribution companies being sold by the State of Victoria in its first stage of privatizing distribution and generation utilities. Moody's Investors Service has placed the ratings of PacifiCorp and PacifiCorp Holdings on review for possible downgrade.

Byline: 
Lori A. Burkhart
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Merge N.Y. Utilities, Says Sithe

Sithe Energies Inc. claims that its restructuring proposal, "Energizing New York," would save ratepayers $15 billion over 10 years, while creating a favorable environment during the transition to competition.

Byline: 
Lori A. Burkhart
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Interstate Energy Corp.: A Three-way Tie

In the first three-way merger in utility history, IES Industries Inc., Interstate Power Co., and WPL Holdings, Inc. propose to combine as Interstate Energy Corp. The companies project merger savings of about $700 million over a 10-year period. If approved by regulators and shareholders, the proposal would result in a corporation with market capitalization of about $2 billion, and assets of almost $4 billion. Interstate would rank 34th among U.S. utility holding companies, based on 1994 revenues.

Byline: 
Lori A. Burkhart
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