Fortnightly Magazine - September 1 1997

Coalition Offers Alternative to Michigan PSC Plan

A coalition of Michigan electric utility customer groups and other entities has proposed an electric restructuring bill in lieu of the plan adopted by the Michigan Public Service Commission on June 5.

"Six months ago, many from this same group came together to point out that the commission's plan, if implemented, would be too slow, would favor the state's largest utilities and would result in few, if any, real savings for customers," said David Dornbos Sr., chair of Association of Businesses Advocating Tariff Equity.

Pipeline Customers To Get Storage Gas at Cost

The U.S. Court of Appeals for the District of Columbia Circuit has upheld a ruling by the Federal Energy Regulatory Commission requiring an interstate pipeline company to sell excess low-cost storage gas supplies to its sales customers at cost, on the theory that ratepayers who bear risk for losses in industry restructuring should retain gains from the same process.

The pipeline, Williston Basin Interstate Pipeline Co., had found that excess gas was available after it had cut sales operations as part of the market restructuring ordered by the FERC.

Utility Files Suit Against Whistleblower Law

Northeast Utilities has filed suit asking the Federal District Court in Hartford to declare unconstitutional a new state whistleblower law, which became effective May 27.

The utility said that while it agrees with the intent of Public Act No. 97-60, the law violates the constitutional rights of employers. The law would prevent utilities and related businesses from retaliating against an employee that goes public about alleged wrongdoing by a company. Northeast Utilities believes it denies employers a reasonable time to investigate and respond to employee complaints.

Pa. Court Defines Need for Transmission Lines

Overturning a utility commission ruling, the Pennsylvania Commonwealth Court has concluded that state law does not require an electric utility to prove that a planned transmission facility is needed from an engineering perspective to win a certificate of convenience authorizing construction.

The court overturned a ruling by the Pennsylvania Public Utility Commission that had denied an application by Pennsylvania Power and Light Co. to construct a 69-kilovolt transmission line.

Pricing Transmission Constraints

Your editorial in the June 1, 1997 issue ("PJM's Brave New World," p. 4) provided a perceptive analysis of the Pennsylvania transmission pricing debate. As you point out, standard economics defines the value of a transmission constraint as the difference between the price of electricity on one side of the constraint and price on the other side. There can be no dispute over this statement; however, this straightforward theory is not always correctly applied.

In the case of electricity, the marginal running cost (or energy price) cannot be used to determine the value of a constraint.

Ratepayers Win Compensation as Oregon OKs Enron/PG&E Merger

Regulated customers of Portland General Electric Co. will receive compensation both for lost profits and for future, anticipated efficiencies under the final decision issued by the Oregon Public Utility Commission that approved the merger between PGE and Enron Corp.

Under the approved merger plan, Enron will absorb the utility's corporate parent, Portland General Corp.

As a result of negotiations between the merging companies and the commission's staff, Enron has agreed to guarantee "monetary compensation and benefits" to Oregon ratepayers in the amount of $141 million.

The Wires Charge: Risk and Rates for the Regulated Distributor

Open-access tariffs hold the key to capturing the gains promised by electric restructuring.

In a restructured electric industry, unbundling the cost of the wires from power generation may well prove more important than dealing with stranded costs. In fact, stranded costs eventually will take care of themselves, whether by direct recovery, indirect recovery or no recovery. Without proper unbundling, however, a restructured industry could force competitors to pay inflated access fees to the distribution utility.

The matter has drawn a lot of attention.

Pilot Program Nearly Perfect

In reference to your May 15 article, "Report Finds Problems With Choice Pilot" ("Headlines," p. 16), following is the industrial customers' response to the report.


On May 7, 1997, a group of large industrial consumers of electricity on the Illinois Power Co. system, referred to as the Illinois Industrial Energy Consumers, filed a response to a recently submitted report by Illinois Power Co., pertaining to the Direct Energy Access (DEAS) report.

California Identifies Diablo Canyon Sunk Costs

The California Public Utilities Commission has valued sunk costs for the Diablo Canyon nuclear generating plant at $3.287 billion. The ruling forms the basis for future ratemaking treatment for the plant assets by its owner, Pacific Gas and Electric Co., according to industry restructuring under way in the state.

The approved rate plan includes an overall rate freeze and a bond-financed 10-percent rate reduction for residential and small commercial customers. Both are called for under the state's new electric industry restructuring law (Assembly Bill 1890).

Metering in Real Time: A New Cost Equation for Electric Utilities

Is it now worth the investment to install smart meters, complete with two-way communication?

The meter has always been the "cash register" in the basic operations of the utility business. Now it is also becoming a vital communications link, carrying information between a utility and its customers. The meter can supply information critical to customer retention and value-added marketing, as well as more effective system operations.

In choosing from among the wide range of metering options available today, a utility should find a technology that fits its business model.