Fortnightly Magazine - April 1 1996

SMUD Eyes Transmission Market

The Sacramento Municipal Utility District (SMUD) will hold a series of public forums on a new plan to offer electric transmission service under its wholesale point-to-point tariff. SMUD wants to divide its transmission system into five "highways," each carrying a

separate price tag capped at SMUD's cost-of-service (em ranging from $0.43 to $2.93 per kilowatt-hour per month.

California Orders Tracking for Pipeline Reservation Charges

The California Public Utilities Commission (CPUC) has directed Southern California Gas Co. (SoCalGas) to set up a special account to track savings from reduced reservation charges for interstate gas pipeline capacity. The cost savings will track efforts by SoCalGas to reduce capacity reservations on the El Paso and Transwestern pipeline systems.

The CPUC also set up a process to review allocation of savings between core and noncore customers.

CFTC Approves NYMEX Futuresb Contracts

The Commodity Futures Trading Commission (CFTC) has approved the New York Mercantile Exchange (NYMEX) applications for electricity futures contracts on delivery at the Palo Verde Switchyard in Arizona and at the California-Oregon border (COB).

Both contracts use a unit of 736 megawatt-hours (Mwh) delivered over one month. The delivery rate is 2 megawatts in every hour of the delivery period of 16 onpeak hours (0600 to 2200 hours). Both the rate and the period may be amended by mutual agreement of the buyer and seller.

Virginia Sets Rules for Local Telco Competition

The Virginia State Corporation Commission (SCC) has approved final rules for competition in the state's local telephone market, providing minimum certification and other standards for new market entrants. The rules permit subsequent negotiated resolution of controversial issues, such as interconnection rates and terminating traffic compensation, and preserve the right to evidentiary hearings when needed.

KCPL and UtilCorp Take the Merger Plunge

Kansas City Power & Light Co. (KCPL) and UtiliCorp United have propose to merge in a stock transaction valued at about $3 billion. Like MidAmerican before them, the utilities are calling the deal a "merger of equals" that will result in a company with about $6.4 billion in assets and about 2.2 million customers.

KCPL shareholders will receive one share of stock for each share of KCPL common stock; holders of UtiliCorp common stock will receive 1.096 shares. There are about 62 million shares of KCPL common stock and 46 million shares of UtiliCorp common stock outstanding.

Conn. Reviews Executive Compensation

The Connecticut Department of Public Utility Control (DPUC) has finished investigating levels of compensation for selected utility officials. The study followed allegations by the state's Attorney General that certain pay increases to state officials appeared excessive and might contribute to higher utility costs or "adversely affect economic development" in the state.

In particular, the Attorney General cited executive salaries at Connecticut Natural Gas Corp. and Connecticut Energy Corp., parent corporation of Southern Natural Gas Co.

N.H. Wheeling Pilot Nearly Ready

The New Hampshire Public Utilities Commission (PUC) has adopted second revised guidelines for its retail wheeling pilot program. The pilot is independent of full restructuring efforts.

The collaborative group working on the guidelines was unable to make a joint recommendation on stranded costs, but the PUC found no reason to deviate from the 50/50 split, with a true-up where needed. The pilot is limited to 3 percent of each utility's peak load for two years. Participants will be randomly selected from a pool of interested customers.

AT&T No Longer Dominant in Florida Market

The Florida Public Service Commission (PSC) has found that the state's long-distance telecommu-nications market is

sufficiently competitive to permit equal levels of regulation for AT&T Communications of the Southern States, Inc. and all other interexchange carriers.

Fossil in Your Future? A Survival Plan for the Local Gas Distributor

LDC Minimus, LDC Insipidus,

LDC Robustus? Which Would You Rather Be?

Post-Order 636 evolution depends on aggressive regulatory and legislative reform.

"Get out of the gas business. Drop the merchant function. We can't make any money selling gas and we are constantly at risk to having gas costs disallowed. It's a no-win situation.

Bright Outlook for Muni Credit Ratings

Standard & Poor's (S&P) has issued its first quarterly report on public power and rural electric cooperatives: Muni Utility Ratings: 1995, 1996, and Beyond. The report predicts that the shakeout in credit quality that has characterized the municipal utility industry since 1993 will continue in 1996. Downgrades and negative outlook assignments will continue to outpace positive ratings actions, but not at the 1995 rate.