Fortnightly Magazine - April 15 1996


CMS Generation Co., a unit of CMS Energy Corp., has begun operating the 35-Mw, waste-wood-fueled, independent Genesee Power Station near Flint, MI. CMS Generation will sell the electricity to Consumers Power Co. under a long-term contract. Half the plant is owned by CMS, half by Black & Veatch Development Corp. and Genesee Power Co.

Another unit of CMS Energy, CMS Gas and Electric Marketing, has signed an agreement with Marine Coal Sales Co. of Indianapolis, IN, to market electricity, coal, and natural gas in the east central United States.

Financial News

New England Electric System (NEES) and the majority leaders of both houses of the Rhode Island Legislature have proposed legislation that would restructure the state's electric utility industry. The legislation provides for full recovery of all stranded costs, and phases in open access for all retail customers by January 2001. Although customer choice would come about relatively quickly, rates would not decline much in the near term because a transition charge shields NEES from most of the restructuring risk.

Calif. Restructuring Impairs Muni Credit Ratings

Moody's Investors Service has completed its Western Grid Surveillance Review, a study that assessed the potential impact of the California Public Utilities Commission's (CPUC's) electric restructuring proposal on municipal utilities in that region.

PL94-4: Pricing for New Pipeline Construction

On May 31, 1995, the Federal Energy Regulatory Commission (FERC) issued its Statement of Policy in Docket No. PL94-4-000, Pricing Policy for New and Existing Facilities Constructed by Interstate Natural Gas Pipelines.1 In that decision, the FERC sought to provide upfront rate certainty, thereby giving pipelines and shippers a firm basis for making decisions on large-scale investments.

But is that objective realistic?

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.