Fortnightly Magazine - February 15 1997

Enron Joins With California Agency

The 700,000-customer Northern California Power Agency and Enron Capital & Trade Resources, an Enron Corp. subsidiary, have formed an exclusive strategic alliance to offer improved energy services while allowing NCPA to compete in a deregulated electric market.

Upon reaching a final agreement, Enron will provide the agency with a comprehensive package of services, including sale of natural gas and financial and risk management products.

AEP And Sprint Join On Fiber Optics

AEP Communications Inc., the new telecommunications arm of American Electric Power Inc., has agreed with Sprint Communications Inc. to jointly construct a 150-mile fiber-optic line between Charleston, W. Va., and Roanoke, Va.

AEP and Sprint will share the expenses of building the fiber-optic line. The new line will allow AEP to provide its parent company with network upgrades, while Sprint will add alternate routing and additional capacity between the two cities. Construction begins this spring. (em LB

N.J. Municipal Water System Acquired

New Jersey-American Water Co., the largest water utility in New Jersey, has acquired the Howell Township Municipal Water System for $35.1 million, in what NJAW believes to be the largest private acquisition of a municipal water system in the U.S.

NJAW President Daniel L. Kelleher noted that Howell Township residents would experience an immediate 5-percent water rate cut, and rate stability.

Transfer of utility ownership also benefits municipalities, Kelleher says, by turning hidden equity into capital to use for community needs.

Pennsylvania Finalizes Regs for Small Water Utilities

With doubts resolved over its legal authority, the Pennsylvania Public Utility Commission has issued "final-form" rules (but subject to legislative review) that allow an "operating-ratio" method as an alternate form of rate regulation for small water and wastewater utilities, many of which now face severe financial difficulties.

For added financial aid, the new rules also allow water utilities to create an emergency maintenance and operation fund as well as a reserve account, with both funded as "customer contributions in aid of construction."

Revenues Eaten Up.

Electric Acquires Water Utility

NIPSCO has agreed

to acquire IWC Resources Corp., the parent of Indianapolis Water Co., for $288 million, prompting a look at credit ratings.

In response to the agreement, Moody's Investors Service is considering a ratings downgrade of IWC ('A1' senior secured). Moody's also confirmed the ratings of NIPSCO Industries, Inc. ('baa3' preferred stock) and its operating subsidiary, Northern Indiana Public Service Co. ('A2' senior secured).

New York Court Rejects EMF Claims

A New York appellate court has rejected claims by sellers of a residential property located near a high-voltage transmission line in Westchester county that the utility owner of the line should pay compensation for a drop in property value allegedly due to public fears about electromagnetic fields.

The case turned on the court's interpretation of constitutional "taking" rules and the legal doctrine of "inverse condemnation.

"Invasion" Claimed. The sellers had sued Consolidated Edison Co.

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.