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Fortnightly Magazine - August 1997

Frontlines

The PJM Interconnection is what they call a "tight" power pool. As the Federal Energy Regulatory Commission has explained, tight power pools "extensively coordinate" their planning and operations, with central dispatch of generating plants. This coordination builds reliability--one of the long-term benefits, says the FERC, of a tight power pool.

Coordination also builds market power, however. And, as we all know from FERC Order 888, market power in transmission stands as "the single greatest impediment" to electricity competition.

Byline: 
Bruce W. Radford
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PJM Restructuring Battle Continues

Nine members of the Pennsylvania-New Jersey-Maryland Power Pool filed a revised plan at the Federal Energy Regulatory Commission to establish an independent system operator for the Mid-Atlantic power market.

The utilities have been battling with lone dissenter PECO Energy over the details of the ISO.

The nine utilities, dubbed the "supporting companies," agree on the form that an ISO should take. In November 1996, the FERC had rejected ISO proposals by both parties as having failed to comply with Order 888.

Byline: 
Lori A. Burkhart
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People

The National Association of Regulatory Utility Commissioners has elected Susan F. Clark, commissioner of the Florida Public Service Commission, as its representative on the North American Electric Reliability Council. Clark has served as Florida's commissioner since 1991. Commissioner of the North Carolina Utilities Commission, Allyson K. Duncan, also was elected to serve as a NARUC representative. Duncan will represent NARUC on the advisory council to the board of directors of EPRI.

Tony A. Prophet, former new business development v.p.

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FERC to use GDP to Estimate Equity Return

Through two orders issued on June 11, the Federal Energy Regulatory Commission has set policy on return on equity for interstate natural gas pipelines (em specifically, the component of long-term dividend growth in the discounted cash flow model.

In both cases, the FERC applied the long-run growth rate of the economy, as measured by the U.S. gross domestic product. (See, Re Northwest Pipeline Corp. Opinion No. 396-B, Docket Nos. RP93-5-025 and RP93-96-005; Re Williston Basin Interstate Pipeline Co., Docket Nos.

Byline: 
Lori A. Burkhart
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Joules

MCN Investment Corp. and Tennessee Gas Pipeline Co. plan to build a $45-million liquified natural gas plant near the Delaware-Maryland border. The project, named Continental States Peaking Services L.L.C., would liquify, store and vaporize gas beginning in early 2000. It would connect to the Eastern Shore Natural Gas pipeline system, with access to the Transcontinental Gas Pipe Line and Columbia Gas Transmission system.

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In Brief...

Sound bites from state and federal regulators.

Overseas Investment. Michigan certifies plan by Consumers Electric and Gas Co. to bid on the outstanding equity of three electric distribution companies being privatized in Buenos Aires, Argentina. Case No. U-11331, April 14, 1997 (Mi.P.S.C.).

Appliance Repair Rates. New Jersey OKs rates for Public Service Electric and Gas Co.

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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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