Fortnightly Magazine - February 15 1997

Enron Buys Wind Power Developer

Enron Corp. has purchased wind-power developer and manufacturer, Zond Corp. of Tehachapi, Calif., and plans to form a new business unit, the Enron Renewable Energy Corp., which will be responsible for developing renewable energy sources for Enron.

"Renewable energy will capture a significant share of the world energy market over the next 20 years, and Enron intends to be a leader in this very important market," says Kenneth Lay, Enron Chairman and CEO. According to predictions by the American Wind Energy Association, global wind capacity should reach 23,500 MW by 2005. (em LB

N.C. Suspends Long-term Avoided-cost Rates

The North Carolina Utilities Commission has permitted the state's major investor-owned electric utilities to suspend their

existing avoided-cost rate offers for long-term power purchases from qualifying cogeneration facilities, pending regulatory review.

The commission said it would also review a proposal by North Carolina Power Co. to reduce the eligibility threshold for the avoided-cost rates from the current capacity level of 5,000 kilowatts, to only 100 kW.

Consumers Would Overpay.

Coalition Targets RUS Loans, Coal

A coalition of congressmen and private-interest groups has put the Rural Utilities Service on its hit list, aiming to save taxpayers about $11.5 billion over five years.

Dubbed "Stop Corporate Welfare," the coalition has targeted 12 programs. The RUS is first on the roster.

The coalition group notes that the RUS subsidizes loans for electric cooperatives, which serve 10 percent of the population. The group also says that loans to co-ops are made at interest rates not only below the Treasury's borrowing costs but well below that of investor-owned utilities.

Off Peak

Liberalisation of the electricity markets in the UK and Scandinavia has driven merger activity in these territories. This was evident in 1996 with U.S. companies taking over MEB, East Midlands Electricity and Northern Electric, with London Electricity likely to follow in early 1997.

Ohio Gas Pilot Offered To 170,000

The Ohio Public Utilities Commission has approved Columbia Gas of Ohio's "Customer Choice" program, which allows customers to purchase natural gas from other suppliers starting in April (Case No. 96-1113-GA-ATA).

About 170,000 customers in the Toledo area will be eligible to participate, making it one of the largest pilot programs in the nation. The utility anticipates that the program eventually will be available to all of its customers.

Anti-Competitive Impacts of Secret Strategic Pricing in the Electricity Industry

Flexible prices make markets hum,

but discounts discriminate when monopolies rule.

Many expect that the electricity industry is moving inexorably toward a much-publicized "new competitive era." Companies, regulatory officials and experts all regard the momentum as powerful.

So far, the changes are just beginning, and there is a long way to go to reach fully effective competition. %n1%n Yet even at this early stage, the merger and pricing strategies adopted by the established electric firms may be threatening the prospects for competition.

Performance-Based Plan Withdrawn

Northern Illinois Gas "reluctantly" has

withdrawn its performance-based rate proposal from the Illinois commission. Under the proposal, NIG would have compared its total annual gas supply costs against a market-based benchmark, and the difference would have been shared between NIG and its customers. Presently, natural gas supply costs are recovered directly from customers without mark-up.

NIG had filed its proposal in response to an amendment to the Illinois Public Utilities Act authorizing the commission to approve performance-based rates on an experimental basis.

Legislative Hot Spots: From Texas to Ohio, New Jersey to Minnesota, Electric Restructuring Games Begin

Perhaps the only political prediction bound to come true this year is that the words ôelectric restructuringö will reverberate in nearly every stateÆs legislative chamber.

So says Matthew Brown, director of the energy project at the National Conference of State Legislatures.

But other factors support BrownÆs prediction. Public Utilities FortnightlyÆs informal survey of most states turned up similar results. Legislators know that the Clinton Administration and the U.S. Congress plan to introduce a federal bill this year.

Georgia To Open Gas Markets

The opening of the Georgia General Assembly on Jan. 13 prompted the Georgia Public Service Commission to push for competition in the state's natural gas industry. Following a December report by the Georgia House and Senate Gas Study Committees, legislation is expected this session to open up the gas market.

That report, in effect, rejected a proposal by Atlanta Gas Light Co. to enact competition. Now AGL has a new proposal, which would transform it into a "pipes" company that no longer would sell gas to end users.

Power Pool Politics: How New England Agreed to an ISO

With its membership opened, NEPOOL sets a transmission tariff, but still must develop competitive markets. In 1993, after a series of attempts going back as far as 1971, the New England Power Pool failed to reach agreement among its members for a regional transmission arrangement. But destiny then took over (em with help from the newly enacted Energy Policy Act (em to lead pool members back to the bargaining table. Finally, on Sept. 30, 1996, NEPOOL announced that its executive committee had agreed in principle on restructuring the pool.