Fortnightly Magazine - October 15 1996

Ohio Oks Real-time Program

The Ohio Public Utilities Commission (PUC) has authorized Ohio Edison Co. to begin a real-time pricing (RTP) experiment that will test customer response to hourly price signals. The program allows customers to shift usage to a lower-price period or to add usage during lower-price periods.

Participation is limited to large usage customer classes. The program rate is designed so that if a customer's actual and historical usage patterns match, the bill will be the same as if the customer was not on the RTP program. Re Ohio Edison Co., Case No. 96-436-EL-ATA, Aug.

Off Peak

Skittish Stockholders? Polling Arizona

Utilities, like the President, may face a hard fight

for this state's trust.

Should investors continue to put their faith in utilities?


Mid-American Power, LLC has bought a 53-Mw, coal-fired generating plant, put it on the power grid, and plans to convert the facility into a 300-Mw, gas-fired, combined-cycle plant. Mid-American bought the E.J. Stoneman Station in Cassville, WI, from Dairyland Power Cooperative after almost two years of negotiations. The companies making up Mid-American include Power Systems, Ltd., Burns & McDonnell Engineering, Inc., and WPS-Power Development, Inc. The plant supplies energy to two regional utilities.

Kentucky Approves Gas-cost Incentives

The Kentucky Public Service Commission (PSC) has approved two gas-cost incentive programs proposed by Columbia Gas of Kentucky, Inc., a natural gas local distribution company (LDC). Under the first phase of the experiment, the LDC will retain 35 percent of its offsystem sales, returning 65 percent to ratepayers. Phase two allocates to ratepayers all capacity-release revenues received by the company up to a benchmark level.

Merger Mania Continues

Ohio Edison Company and Centerior Energy Corp. announced an agreement September 17 on a tax-free, stock-for-stock merger to form a new holding company, FirstEnergy Corp., worth about $4.8 billion, based on stock prices that closed several days earlier.

The news came a month after two other merger deals were announced in mid-August: 1) Atlantic Energy, Inc. and Delmarva Power & Light Co. ($2.2 billion), and 2) Houston Industries Inc. and NorAm Energy Corp. ($3.8 billion). NorAm is the nation's third-largest U.S. natural gas utility.

Florida Rejects Discount Rate Proposal

The Florida Public Service Commission (PSC) has rejected Gulf Power Co.'s proposal to offer negotiated contracts to large customers that would otherwise procure power from another source. The utility had proposed using incremental cost as the price floor for its negotiations, but the PSC found the procedures for administering the tariff "insufficient to justify a departure from offering electric service based on standard tariffed rates." Re Gulf Power Co., Dkt. No. 951161-EI, Order No. PSC-96-0845-FOF-EI, July 2, 1996 (Fla.P.S.C.).


PUC Loans Would Bolster ISO, Power Exchange

The California Public Utilities Commission (CPUC) has approved loan guarantees of up to $250 million to fund development of computer hardware and software to help the electric industry establish the independent system operator (ISO) and the Power Exchange (PX), both key components of the CPUC's proposed restructuring plan.

Pacific Gas & Electric Co. and Southern California Edison Co. each had asked for $112.5 million in loan guarantees; San Diego Gas & Electric Co. had asked for $25 million.

Cost Decoupling Placed on Hold

While approving an increase in base rates of $26.8 million for Pacific Power and Light Co., the Oregon Public Utility Commission (PUC) has rejected a proposal to adopt a revenue decoupling mechanism and establish a systems benefits charge as part of the rate ruling.

Staff Report Wants "Go Slow" Restructuring

A 400-page report by Virginia State Corporation Commission staff concludes that Virginia's best interest will be served by a slow and carefully analyzed move toward electric utility competition, rather than by immediate, massive restructuring.

Maine Plan Would Spin Off Generation

A draft plan issued by the Maine Public Utilities Commission (PUC) to restructure the state's electric industry, currently under review at the state legislature, would require investor-owned utilities to separate operation of generation assets from the rest of the company by 2000, and to divest themselves of those assets by 2006.

The plan would also require retail electric suppliers to maintain a minimum block of renewable supply, and recommend that the state legislature fund low-income assistance currently provided as part of utility rate structures through a general tax