News Digest

Fortnightly Magazine - October 15 1998

State PUCs

ISO GUIDELINES. Marking a contrast with California, but lining up with states in the Northeast, the Iowa Utilities Board has urged that independent system operators should have authority to order redispatch to help fulfill service requirements for electric transmission. That rule came as part of a set of principles issued by the board to guide the formation of ISOs in managing electric transmission systems and preventing the exercise of market power.

By urging redispatch authority, the Iowa board sided with ISO designs for PJM and New York, whereas in California, the ISO must rely on a secondary auction by scheduling coordinators to accomplish redispatch.

The Iowa guidelines also provide for recovery of approved transmission revenue requirements by owners of the transmission facilities. The board cautioned, however, that "future changes" in the electric industry may cause it to "rethink one or more of the principles." Docket No. NOI-95-1, July 27, 1998 (Iowa U.B.).

GAS RATE DESIGN. To counteract price volatility, the New Mexico Public Utility Commission directed PNM Gas Services to offer two pricing plans to residential gas customers that feature fixed-rate options: (1) a low, fixed customer fee with a higher, more-volatile volumetric rate, and (2) a higher, fixed charge and a lower, more-stable variable component. It rejected a call for a move back to a lower-priced, single-tiered rate design. Case No. 2762, Aug. 7, 1998 (N.M.P.U.C.).

NEW JERSEY RESTRUCTURING. Administrative Law Judge Louis G. McAfoos at the New Jersey Board of Public Utilities issued an initial decision recommending that Public Service Electric & Gas Co. should be allowed to recover $2.5 billion in stranded costs, less than one-half of the $5.5 billion that PSE&G had requested. The ALJ also recommended a rate cut of between 10-12 percent. Electric restructuring legislation was expected to be introduced in the New Jersey legislature in September and be signed into law by the end of the year. (Docket PUC 7347- 97 and 7348-97, Aug. 17, 1998, N.J.B.P.U.).

EMPLOYEE TRANSITION BENEFITS. The Maine Public Utilities Commission adopted rules forcing utilities to cushion the effects of job loss associated with the onset of retail competition in the electric industry, set for March 1, 2000 in Maine.

Under the rules, electric utilities must help employees in maintaining fringe benefits and obtaining new employment. They must provide: (1) retraining and outplacement services for two years; (2) full tuition for two years at the University of Maine or a state vocational or technical school; (3) equivalent health insurance for 2 years; and (4) severance pay equal to two weeks of base pay for each year of full-time employment. The PUC will review the programs only to determine if they meet minimum requirements. Docket No. 98-238, July 1, 1998 (Me.P.U.C.).

MARKETING AFFILIATES. State regulators in Michigan and Virginia have set down conditions by which utility marketing affiliates may participate in pilot programs for customer choice sponsored by the parent company.

n On the electric side, the Michigan Public Service Commission has ruled that the affiliate CMS Marketing, Services and Trading Co. may participate in a direct access pilot sponsored