Fortnightly Magazine - November 15 1997

Global Alliances

DRIVEN BY ECONOMIC GROWTH, INDUSTRIALIZATION and privatization, worldwide demand for primary energy could double by 2020 (em requiring one 500-megawatt power plant to be built every 3.5 days to meet that need. Much of this growth will occur in Asian countries, most notably China, Thailand, India, South Korea, and Indonesia. China alone is expected to increase electric generating capacity by 15,000 MW per year at a cost of about $15 billion annually.

Hydro, Coal Power Up; Gas Down, Says DOE's IEA

Hydroelectric power generation by U.S. electric utilities increased 12 percent between 1995 and 1996, according to the latest publication by the DOE's Energy Information Administration. Hydro generation contrasted with output at gas-fired units. That dropped 15 percent to 263 billion kilowatt-hours (em the lowest level since 1993 (em partly due to a substantial increase in gas prices.

According to Electric Power Annual 1996 Volume 1, the average cost of gas delivered to electric utilities on a dollars-per-million-Btu basis was $2.64 in 1996, the highest since 1985.

Frontlines

WHEN UTILITIES SAY THEY WILL "EXIT" THE generation business (em their stock in trade for the last 50 years (em what does that mean exactly? And what of those that plan to "concentrate" on transmission and distribution? Can you visualize a T&D utility? What would it look like? How many employees? How big a dividend? It's time to ponder these questions.

TVA Gets $7M, Then Zero in ‘99

The House and Senate conference committee working on energy appropriations decided to cut funding for the Tennessee Valley Authority, then end it after 1998.

The Senate had proposed giving TVA $86 billion to fund nonenergy programs such as flood control and environmental programs (em $20 billion less than the amount proposed by the Clinton Administration. The House held out for less, agreeing to fund $70 million in 1998.

TVA Chair Craven Crowell said the $70 million, along with "carryover funds" from 1997, will allow TVA to meet its obligations.

Mailbag

The FERC Uncorked?

If you have quoted Commissioner Massey accurately ("Hoecker Takes FERC Helm, Makes Assignments," Inside Washington, Sept. 1, p. 53), there is the distinct possibility that he has drunk too much wine!

Milton J. Grossman

Attorney

Washington, D.C.

Editor's Note: Our associate legal editor, Lori A. Burkhart, confirms the quote (em "I've visited his house, I've swam in his pool, I've drank his wine" (em but protects her sources.

In Brief...

GAS COMPETITION PLAN. Colorado releases framework for rate and service unbundling for natural gas LDCs, which includes: treatment of stranded cost, utility affiliate participation in the competitive market and supplier obligations. Docket No. 97I-0336, Aug. 19, 1997 (Colo.P.U.C.).

Local Telco Rates. Idaho directs USWEST Communications Inc. to reduce annual revenues by $327,000 and approves proposal to compensate ratepayers $4.2 million for yellow pages revenues. It also sets the rate of return on equity at 11.2 percent.Case No. USW-S-96-5, Order No.

People

THAINE J. MICHIE, general manager of the Platte River Power authority, was named president of the American Public Power Association. Michie has more than 30 years experience in the electric power industry; he has served on the APPA board since 1990.

Lanny P. Waguespack was chosen to head CMS Gas Transmission and Storage Co.'s new Denver office. He also was named director of business development in the western U.S. for the CMS Energy Corp. unit.

Executives at two subsidiaries of Aquarion Cos. were elected to leadership positions at industry associations. Leendert T.

PUC Says Futures Trading Could Undermine PX

The California Public Utilities Commission, citing restrictions that force electric utilities to buy and sell power through the state's power exchange, has rejected a request by Pacific Gas and Electric Co., to use energy-related financial derivatives (em futures, swaps and options, etc. (em to manage risk associated with volatility in gas and electric commodity markets.

According to the commission, the proposal by PG&E for blanket authority to employ derivatives would violate several aspects of its electric restructuring policy.

Joules

CON EDISON renamed two unregulated subsidiaries: ProMark Energy Inc. (now Con Edison Solutions Inc.) and Gramercy Development Inc. (now Con Edison Development Inc.). Con Edison Solutions will provide electricity, natural gas and oil to commercial and residential customers in the Northeast. Con Edison Development will invest in energy and nonenergy business in the U.S. and overseas.

AES Corp. has begun construction of an 830-megawatt, gas-fired combined-cycle power plant in San Nicolás, Argentina. Nichimen Corp.

Utilities Must Educate, Again

Seeking to wrest control of public relations for electric competition from private "stakeholders," the California Public Utilities Commission has authorized the state's three largest investor-owned electric utilities (em Pacific Gas and Electric Co., San Diego Gas and Electric Co. and Southern California Edison Co. (em to spend $89.3 million for consumer education on electric restructuring, through mass media, mail, local outreach and a toll-free call center.

In a separate order, the PUC authorized PacifiCorp and Sierra Pacific Power Co.