Fortnightly Magazine - February 15 1996

Big Share of '95 Fuel Mix

For the second year in a row, natural gas fueled an increasing share of U.S. electric generation. When the final numbers are tabulated for 1995, electric generation is expected to have increased about 2.7 percent over the previous year. This compares to a 0.98-percent increase for the 1993-1994 period. Gas accounted for over 10 percent of the 1995 utility fuel mix (em up from 8.8 percent just two years ago.

jü( )l, n: A unit of energy measurement equal to a watt-second.

According to a Newton-Evans Research Co. survey of 60 information system managers from gas, electric, and water utilities in more than 12 countries:

s About 45 percent of utilities surveyed plan to replace current computer systems through 1997.

s IOUs tend to spend more for information technology than their publicly operated peers: close to 3 percent of revenues.

In response to a mandate by New York Gov. George E. Pataki, a Long Island Power Authority (LIPA) advisory team has developed a proposal to dismantle the Long Island Lighting Co. (LILCO), hoping to reduce electric rates by as much as 12 percent. In response, Moody's Investors Service has changed the direction of its review of LILCO's credit ratings from negative to uncertain.

LIPA intends to create a LIPA "wire company" that would buy LILCO's transmission and distribution assets, including some payment for the Shoreham plant.

A new Standard & Poor's (S&P) report, Direct Access Threatens Utility Revenues, predicts that electric utility revenues would decline 6 to 16 percent ($10 to $26 billion) if retail direct access is implemented. S&P bases its findings on two scenarios: In the severe case, direct access occurs immediately for all customer classes and no surcharge mechanism recovers lost revenues. The more reasonable scenario assumes that only large commercial and industrial (C/I) users will exercise their right to choose direct access and that 50 percent of C/I lost revenues will be recovered in rates.