Fortnightly Magazine - August 1997

PacifiCorp To Acquire The Energy Group for $9.6 Billion

PacifiCorp has made a cash offer for The Energy Group PLC, a diversified energy company in the U.K., Australia, and U.S. The boards of directors of both companies unanimously approved the transaction, valued at $9.6 billion in debt and equity.

PacifiCorp Holdings Inc., a wholly owned subsidiary of PacifiCorp, is offering $11.35 per share for The Energy Group. PacifiCorp will assume The Energy Group's $3.8 billion of debt in the transaction.

Byline: 
Lori A. Burkhart
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Competition Stymied in Illinois, Oregon

Bills that would have restructured electric markets in Illinois and Oregon have died due to lack of support.

A bill, H.B. 2821, which would have opened the Oregon electric market to competition by October 2001, has died in the Oregon House, lacking the 31 votes needed for passage. Meanwhile, the Illinois Senate has decided to postpone until the fall its deliberations on the state's proposed electric restructuring bill, which has the approval of the Illinois House of Representatives.

Industrial customers and consumer groups supported the Oregon bill.

Byline: 
Lori A. Burkhart
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LDC Recovers Coal Tar Cleanup Costs

The Maine Public Utilities Commission has authorized Northern Utilities Inc. to recover coal-tar cleanup costs via a special surcharge.

Under a settlement agreement, ratepayers will pay the full amount of cleanup costs incurred by the LDC on a rolling five-year amortization schedule. The costs will be capped at 4 percent of the company's annual adjusted total firm revenues from sales and transportation customers. Shareholders will bear the carrying costs on all deferred balances during the amortization schedule.

Byline: 
Phillip S. Cross
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Brownout Credit Card Cost Connecticut Utility

Connecticut Attorney General Richard Blumenthal has asked the Connecticut Department of Public Utility Control to order a one-time, 25-percent credit on bills of Connecticut Light & Power customers, claiming the threat of brownouts and blackouts has reduced service quality. That translates into about $33 million in customer credits.

Blumenthal also asked that the DPU order additional credits of the greater of $10, or 15 percent, in any month with one day of brownouts or blackouts, and $15 or 20 percent, for two days of problems.

Byline: 
Lori A. Burkhart
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Water Infrastructure Agreement Reached

The Pennsylvania Public Utility Commission has entered a cooperative agreement with the state's Infrastructure Investment Authority to better coordinate efforts by both agencies to improve the viability of small water and wastewater systems across the state.

The commission said many small systems had not increased rates when needed and had become unprofitable. The systems had been unable to acquire financing to make improvements to maintain good service quality and to meet future regulatory challenges.

Byline: 
Phillip S. Cross
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GPU Seeks $1 Billion in Stranded Costs

GPU Energy has filed electric restructuring proposals for its subsidiaries with the Pennsylvania Public Utilities Commission, calling for stranded cost recovery through a customer charge.

The filing for subsidiaries Metropolitan Edison Co. and Pennsylvania Electric Co. estimates stranded costs of $641 million and $372 million, respectively. The utilities want to recover stranded costs through implementation of a competitive transition charge paid by all customers using GPU Energy's distribution system.

Byline: 
Lori A. Burkhart
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States OK Telephone Industry Consolidation

State regulators in New Jersey, New York and California have recently approved mergers of local exchange and long-distance telephone carriers operating within those states that are part of larger interstate and international consolidations.

NYNEX/Bell Atlantic. The New Jersey Board of Public Utilities has approved the merger of two major local-exchange carrier holding companies, NYNEX Corp. and Bell Atlantic Corp.

Byline: 
Phillip S. Cross
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Michigan City Still Disputing Stranded Costs

The Federal Energy Regulatory Commission has moved closer to deciding the stranded cost dispute between Consumers Energy and the city of Alma, Mich., which intends to construct its own municipal electric system.

On Sept. 10, the FERC set for hearing two stranded cost issues: (1) whether Consumers Energy has met the "reasonable expectation" standard justifying stranded cost recovery from Alma; and (2) if so, what amount the utility may recover. (See, Docket No. sc97-4-000.)

Consumers Energy wants $56.1 million in stranded cost payments from Alma.

Byline: 
Lori A. Burkhart
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Virginia to Examine VEPCO's Rates, Earnings

The Virginia State Corporation Commission has announced it will conduct a broad-based investigation into current earnings and rate structures of Virginia Electric and Power Co. in light of changes under way in the electric market. The commission's staff had found, as part of an annual earnings review, that the utility "is clearly in an overearnings position."

The staff observed that the company may have "potentially large levels of stranded costs" because of uneconomic power contracts with nonutility generators.

Byline: 
Phillip S. Cross
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