In a little over a year, the electric utility industry has seen six significant mergers.1 This trend toward consolidation most likely will increase as the industry becomes more competitive.
Distributed Generation. In December and January the Illinois commission took comments from utilities, marketers, manufacturers, and trade and advocacy groups on how to develop policy on distributed generation.
* Rulemaking Strategy. Enron has urged the state to proceed in a fashion similar to the California PUC's
two-track investigation. It asked for two separate rulemakings on (1) interconnection standards for DG installations of 50 megawatts or less, and (2) rate design and operational issues.
* Unit Size Limits. The commission staff opposed setting any size limit on DG units. It noted that the California PUC set a 20-MW ceiling in its definition of DG to discourage DG owners from wholesale activities, preserving cost savings for consumers:
"The CPUC position was that cost savings from providing less wire and fewer connections (transformers, relays) between the power supply and the end-user, and the savings from reducing line loss and congestion on the transmission and distribution grids, would go directly to the retail customers instead of a third-party marketer or middleman.
"While this approach might be what California was looking for ¼ [we favor] a more even-handed policy that would allow generation or storage of any size to locate on the distribution system."
* Metering and Interconnection. Enron favored net metering for small DG installations, whereas the Edison Electric Institute opposes that. According to EEI, net metering creates subsidies for DG customers: "Net metering does not keep the incumbent whole for transmission and distribution costs or for the on-peak value of power. ¼ [I]t skews the price signals."
EEI added that the Institute of Electrical and Electronics Engineers "may take two years to finish its work on interconnection standards."
* Rate Structure. Commissioner Terry Harvil had asked for comments on whether unbundled electricity delivery rates should be differentiated geographically to encourage DG in areas needing grid upgrades. The staff believed that costs of managing such rates might outweigh the benefits. Enron felt that it was too early to consider the question.
David Moskowitz of The Regulatory Assistance Project ( www.rapmaine.org) acknowledged rate de-averaging for transmission through nodal and zonal congestion pricing, but said distribution networks are different, usually having only single paths from substation to load, making de-averaging impractical.
* Disincentives. Moskowitz warned that utilities around the country were starting to propose higher fixed monthly customer charges and much lower usage charges for distribution service, specifically to make DG "far less attractive" to customers. He cited a case where a Nevada utility suggested raising its residential customer charge to $21 a month.
For all comments, see http://icc.state.il.us/el/docs.asp.
Wires-Only Rates. In a case setting rates for Central Maine Power Co. in its role as a "wires company," the Maine PUC said it would consider alternative approaches to a "top-down methodology" for setting transmission and distribution rate design, where generation costs are removed from current rates using standard offer prices. Docket No. 97-580, Jan. 19, 2000 (Me.P.U.C.).
Earlier, the PUC had OK'd a top-down method for designing core class rates for Maine Public Service Co. (See "News Digest," Feb. 1, 2000, p. 12.)