Fortnightly Magazine - June 1 1996

Management: Merge,. Divest, or Both?

s Merger Magic

"Occasionally, yes. There are obviously some fairly easily measurable synergies in some mergers. . . . The real issue, however,

is not whether there are savings. The real issue is could those savings have been obtained without concentrating the economic power that goes with a merger?

"Generally, we've dealt with it with judgment.

In Brief...

Sound bites from state and federal regulators.

Gas Franchise Rights. North Carolina adopts new rules on gas service expansion under a 1995 state law forcing incumbent gas distributors to forfeit exclusive franchise rights in unserved territory in certain cases, but allows a two-year grace period if the utility can show a commitment to build plant needed to reach unserved areas. Docket No. G-100, Sub 70, Mar. 19, 1996 (N.C.U.C.).

Firm vs. Interruptible. Idaho OK's proposal by Washington Water Power Co.


Oliver Richard is a gas man. His career includes a stint at the Federal Energy Regulatory Commission, as well as at Tenngasco, Northern Natural Gas Co., Enron, New Jersey Resources Corp., and The Columbia Gas System, Inc. Now he's found a new calling. He wants to be an ad man.

Several weeks ago I heard Richard describe his idea for the perfect 30-second TV spot to plug natural gas. Two utility CEOs are on the golf course. "Electricity costs too much," says one. "Some towns can't get gas service," says the other.

Illinois Approves Retail Wheeling Trials

The Illinois Commerce Commission (ICC) has OK'd experimental wheeling programs advanced by two of the state's major investor-owned utilities, Illinois Power Co. and Central Illinois Light Co. Both plans focus on large industrial customers, but Central Illinois would also allow direct access for commercial and residential customers over a five-year period in five defined test areas (called "open access sites").


Michael Baly, American Gas Association president and CEO, will chair the National Energy Foundation. He replaces Richard Lawson, president of the National Mining Association. Arthur Wiese, Jr., public affairs v.p. of the American Petroleum Institute, was elected vice chair.

Attorney Karen A. Tomcala was promoted to the staff of James J. Hoecker at the Federal Energy Regulatory Commission. Previously, Tomcala practiced in the FERC's electric rates and corporate regulation section.


The Tennessee Valley Authority (TVA) plans to take its first-ever private company partner to convert the Bellefonte Nuclear Plant. The two-unit plant, near Hollywood, AL, will likely be finished as a gas-fired facility. The decision not to complete the units as nuclear plants ended a 28-year policy of nuclear construction at TVA.

South Carolina Electric & Gas Co. began operating its $411-million, 385-Mw Orangeburg County plant January 15.

Pending the approval of state regulators, Puget Sound Power & Light Co. and Washington Energy Co.

Vermont Questions Telco, Competition, Network Investment

In approving a stipulated rate increase of $7.5 million for NYNEX for local exchange telephone service, the Vermont Public Service Board (PSB) nevertheless has cited several unanswered issues, including: 1) stranded investment in copper-loop facilities, 2) expenses for corporate restructuring and downsizing, and

3) improvements to network infrastructure in the state.

The PSB added that NYNEX had failed to take advantage of falling local-exchange access charges

(a primary reason for the current hike in local service rates) to cut its long-distance calling rates

LILCO Opens Gas to Competition

The New York Public Service Commission (PSC) has approved a plan, "NaturalChoice," allowing customers of Long Island Lighting Co. (LILCO) to purchase natural gas from a qualified supplier of their choice. LILCO is the first company in New York, and one of the first in the nation, to open its gas system to competition.

LILCO's commercial, industrial, and residential gas customers may now choose to purchase gas directly from brokers or to continue purchasing from LILCO.

Court Favors Rate Impact Test for DSM

The Florida Supreme Court has upheld a decision by the state commission (PSC) to test the cost-effectiveness of demand-side management (DSM) programs for the state's four largest investor-owned electric utilities by measuring the impact of the programs on rates for all consumers, whether or not they participate in DSM programs.

It held the Rate Impact Measure (RIM) test consistent with state law directives to avoid discrimination between rate classes for DSM initiatives (em more so than the Total Resource Cost (TRC) test used alone.