Fortnightly Magazine - February 1 1997

California Puc Sets PG&E Transition Charge

The California Public Utilities Commission has approved an interim competitive transition charge (CTC) for Pacific Gas & Electric Co. (PGE), effective until the PUC adopts a permanent, industry-wide CTC.

PG&E would collect the charge (39 percent of the current bundled rate) from any customer existing its system before January 1, 1998, the start of electric competition in California.

PG&E spokesman Tony Ledwell said less than a dozen customers had indicated they would attempt to leave the PG&E system early.

Arkansas Examines Arkla Merger Plan

Finding no adverse consequences, but warning that the record was not yet complete, the Arkansas Public Service Commission has granted preliminary approval of a plan for the merger of Houston Industries, Inc., the holding company for Houston Lighting and Power Co., and NorAm Energy Corp., which provides natural gas distribution service in several states via three operating divisions, Arkla, Entex, and Minnegasco.

PSC Approval will remain conditional pending the outcome of related merger proceedings in Louisiana, Mississippi, and Minnesota, as well as before the Federal Energy Regulato

Massachusetts Utility Postpones Choice Plan

Commonwealth Electric Co. (CE) has postponed an electric retail pilot program for five industrial customers, fearing that market prices could run 5-percent higher than what the participants pay under regulation. Last summer, CE had predicted that program participants could save 15 percent off their electric bills.

CE and its consultant, Koch Energy Services Inc., attributed the jump in market prices to concern about possible power shortages follwing a shutdown of four nuclear power plants in New England.

SoCal Gas Adopts Monthly Pricing

Southern California Gas Co. (SCG) has begun using monthly forecasts to set prices for its core commercial and industrial natural gas customers, ending the practice of forecasting gas costs more than one year in advance and then computing the bill using a projected, annual weighted-average cost of gas (WACOG).

Monthly gas pricing is expected for residential customers when the California PUC reaches a decision in SCG's Biennial Cost Allocation Proceeding.

Futures, Swaps, Derivatives Escape Filing Requirement

The Idaho Public Utilities Commission (PUC) has ruled that electricity futures contracts or other types of "derivatives" or risk management instruments (e.g., options, forward contracts, swaps, etc.) do not fall subject to certain state regulations that exact fees and require PUC approval for security issues by utilities.

It distinguished the two categories: risk management instruments aim to shelter utilities from losses, while security issues usually provide a source of funding. Utilities, it said, need not file a confidential copy of its risk management plan with the commission.

Utilities Share Trenches and Costs

Idaho Power Co. (IP) has joined with Intermountain Gas Co., U S WEST, and TCI Cable in the Joint Utilities Trench Program, which places electric, gas, and telecommunications, wires, cables, pipes, and conduits into a single trench rather than individual trenches for each service provider.

The arrangement applies to new residential and commercial subdivisions, apartment complexes, and residential services. By using a single, joint trench, developers expect to reduce overall installation time for electric, gas, and telephone service in a new subdivision by as much as 70 percent.

Off Peak

Top utility executives are winning pay hikes these days, but only at the cost of risky stock options that put a premium on company performance.

"Higher overall pay levels, and especially the increased use of long-term incentive plans, point to the trend in the utility industry toward heightened risk-and-reward pay strategies," according to Executive Compensation in the Utility Industry, a recently released report compiled by William M. Mercer Inc.

The use of at-risk pay incentives becomes even more pronounced as the size of the utility increases.

Nevada Power Asks For Cut

Nevada Power Co. (NP) has announced a tentative agreement for the largest rate reduction in its history, reflecting lower purchased power prices, lower overall fuel costs, and improvements in efficiency.

Connecticut Yankee Nuclear Plant to Close

The eight utility

owners of the 560-megawatt Connecticut Yankee nuclear plant have decided to shut down the facility rather than make expensive repairs estimated at over $100 million, after having estimated plant costs at five cents per kilowatt-hour, or about 20-50 percent above the cost of replacement power.

Northeast Utilities, a 49-percent owner, said it would lay off about two-thirds of the plant's 322 employees. Other plant owners include Boston Edison, New England Electric System, the Cambridge Light Co., and Eastern Utilities Associates. t

Lori A.