Fortnightly Magazine - April 15 1996

Restructuring Moves Forward in Massachusetts

The Massachusetts Division of Energy Resources (DOER) has filed its electric restructuring proposal, "Power Choice," as part of the Massachusetts Department of Public Utilities investigation into competition. The proposal will be considered along with restructuring plans submitted by the state's three largest utilities.

Power Choice calls for electric utilities to voluntarily separate into generation and distribution companies. Customers would continue to receive distribution service through their present providers; generation would become competitive.

Reliability, Not Economy, Dictates Transmission Line

The California Public Utilities Commission (CPUC) has approved a proposal by Sierra Pacific Power Co. to construct a 345-kilovolt overhead transmission line, but not simply to gain access to low-cost power. Instead, the CPUC appeared to emphasize concern over reliability.

Sierra Pacific, involved in merger plans with The Washington Water Power Co., had cited access to low-cost power from the Bonneville Power Administration as an important reason to build the transmission line.

WP&L Withdraws From MAIN

Wisconsin Power & Light Co. (WP&L) has announced that it will withdraw from its current regional reliability council, Mid-America Interconnected Network, Inc. (MAIN), effective December 31, 1997. According to president and chief executive officer of WPL Holdings Errol B.

Price-cap Reforms Reflect Local Competition

Citing heightened competition and lower earnings in the state's local exchange telephone market, the California Public Utilities Commission (CPUC) has frozen price caps for local exchange carriers (LECs) for most noncompetitive local services, and has suspended the 5-percent "x-factor" services for an intermediate level of competition.

ComEd Saves Taxes on Byron Plant

The Illinois Property Tax Appeal Board has decided to cut taxes for Commonwealth Edison Co.'s (ComEd) Byron nuclear power plant. ComEd currently pays about $40 million in real estate taxes on the plant to Ogle County; the decision would lower the payments to $13.3 million. Ogle County will most likely appeal the decision, because certain local tax districts had planned on the revenue, and some have already spent the funds.

LECs in Oregon to See Competition

The Oregon Public Utility Commission (PUC) has authorized three new telecommunications companies to provide local exchange service in competition with existing carriers U S WEST Communications, Inc. and GTE Northwest, Inc.

Raytheon Benefits From "Secret" Contract

The Massachusetts Department of Public Utilities (DPU) has approved a discount electric rate contract for defense contractor Raytheon Co., a customer of Massachusetts Electric Co. (ME). But the secrecy surrounding the contract has created an uproar.

Although the terms of the contract are confidential, Raytheon said the three-year contract would yield "significant savings" on its $20-million annual electric bill. ME called the discount an "economic development" contract, which would keep Raytheon and its 17,500 employees from leaving the state.

PSC Scales Back Residential Subsidy

The Michigan Public Service Commission (PSC) has directed Consumers Power Co. to scale back any residential rate subsidies. The order appeared during a review of a proposed settlement in a series of applications to increase rates, revise depreciation methods, and offer discounts to industrial customers.

The PSC added, however, that the company should not try to eliminate the entire subsidy in a single step.

Boston Edison Proposes Real-Time Pilot

Boston Edison has proposed a unique pilot program that would allow 10 large customers to test hour-by-hour pricing. Although the one-year pilot is not a rate discount program, it would offer participants 10 percent off their demand charge (em in effect, a 4-percent discount. The pilot simulates a market price using a computer model that relays an hourly breakdown of costs to the customers. If the customers are able to respond and move their load around, they may save; if not, their electric bill may remain the same, or perhaps rise.

Yellow Pages Ruling Reversed

According to the Arizona Court of Appeals, the state Corporation Commission has violated an agreement with U S WEST Communications, Inc., governing the spinoff of the company's Yellow Pages publishing business as an unregulated enterprise.

The court agreed with U S WEST that the commission erred when it imputed $60.684 million in directory publishing profits to the carrier's regulated operations (em a move that had captured all profits earned by the publishing company above the rate of return of 11.4 percent authorized for regulated services.