Fortnightly Magazine - April 1 1996

Blowing the Whistle on the Coal Train

Before the express train leaves the station, it's worth taking a look at the facts about new electric generating capacity in the United States.

Natural gas has become the primary energy source, accounting for about two-thirds of new capacity during the 1990. In contrast, market share for coal-which currently accounts for over 40 percent of all online capacity, and about 55 percent of online fossil-fuel capacity-is expected to grow only 10 to 15 percent in this decade.

FERC Begins Inquiry, Gives Guidance in "Primergy" Order

The Federal Energy Regulatory Commission (FERC) has announced that it will revisit its 30-year old electric utility merger policy (Docket No. RM96-6-000). The Notice of Inquiry (NOI), Merger Policy Under the Federal Power Act, also orders an expedited hearing on the proposed merger between Wisconsin Electric Power Co. (WEPCO) and Northern States Power Co. (NSP) to form "Primergy" (Docket Nos.

Wisconsin Uses Bidding Threat as DSM Incentive

The Wisconsin Public Service Commission (PSC) has decided to add a "performance mechanism" to its regulations governing demand-side management (DSM) efforts. The PSC found that some utilities were no longer meeting the DSM goals set in their rate cases.


On a bookshelf behind my desk I've stacked up a few older issues of PUBLIC UTILITIES FORTNIGHTLY. Some of them go back more than a half-century. Every so often I pull down a copy to see if I can learn anything from history.

Yes, the advertisements appear quaint (Royal typewriters; IBM punch-card machines; Ditto-brand duplicators). But some of the ideas still have legs, with lively quotations from the likes of Louis Brandeis, Harold Ickes, Walter Lippmann, and Fiorello La Guardia.

In Brief...

Sound bites from state and federal regulators.

Gas System Acquisitions. Alabama Gas Corp. can proceed to acquire gas distribution system of City of LaFayette, AL, and apply systemwide rates to all new customers. Order affirms capitalized income method to set fair-market value for the acquisition, rejects proposal by the Attorney General to switch to a discounted cash-flow method. Dkt. U-3644, Jan. 8, 1996 (Ala.P.S.C.).

Low-income Discounts.

LDC Acts to Retain Large Customers

The Maine Public Utilities Commission (PUC) has authorized Northern Utilities Co., a natural gas local distribution company (LDC), to offer a special rate to extra-large firm sales customers. The new offering is designed to enable large customers with flat loads to obtain gas service at a rate that better reflects the lower nongas cost of service for such customers. Unusually large customers

wishing to take service under the new rate must demonstrate that their load is largely flat and, thus, maximizes the nongas costs of serving their needs.


Ann R. Chamberlain will manage rates and regulations, and plan and procure gas supplies in her new v.p. position with Virginia Natural Gas, Inc. She steps up from assistant v.p.

Boston Pacific Co., Inc. has added John T. Chang to the company's international power project development practice. He comes from Iroquois Gas Transmission System. Jonathan d'E. Coony was promoted to consultant and will continue work on financial evaluation of power projects in Indonesia, Pakistan, and other countries.

Telephone Price-cap Plan Seen Working

The Tennessee Public Service Commission (PSC) has directed South Central Bell Telephone Co., a local exchange carrier (LEC), to reduce rates by $56,285 million under its existing price-cap regulation plan. According to the PSC, the LEC had achieved overall earnings "well above the authorized rate of return" during the rate period ending March 31, 1995.

LDC Aggregates Transportation Loads

The Florida Public Service Commission (PSC) has approved a proposal by Peoples Gas System, Inc. to make gas transportation service available to customers that use more than 500,000 therms of natural gas, in the aggregate, at multiple delivery points within its service territory. To qualify, the multiple facilities must be directly owned and operated in the name of a single customer of record. The rates will be the same as those charged under the otherwise applicable sales tariff, less the purchased-gas adjustment charge.


The article "Electric Utility Mergers: The Answer or the Question?" (by Robert J. Michaels) in the January 1, 1996, issue, along with current events involving my employer, a midwestern utility currently involved in a merger, initiated some questions and comments regarding top executives chairmen.

We expect continued mergers and acquisitions (M&A) in the continental United States until 50 or fewer utilities serve the nation.