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Fortnightly Magazine - March 15 1997

Trends

As the U.S. Congress works to pass federal legislation introducing competition into the electric utility industry, one of the most divisive issues regulators and policymakers must grapple with is that of stranded cost. In a recent study completed by Resource Data International, we have found that an important issue will be how "negative" stranded costs are handled.

At the heart of our study is a detailed, plant-by-plant, analysis of stranded costs for every utility in the country. We estimate that the total above-market stranded cost nationally is $202 billion.

Byline: 
Christopher Seiple
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FERC To Address Market Power, Must-Run Plants

California's three largest investor-owned utilities have petitioned the Federal Energy Regulatory Commission to convene a technical workshop on market-power issues raised by electric deregulation. Although a workshop had been held on Jan. 17, the utilities say the need more guidance (Docket No. ER96-1663-000).

The utilities are most concerned with the issue of "must-run" plants, and how to minimize the market power of generating units that must run to maintain reliability.

Byline: 
Lori A. Burkhart
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Joules

XENERGY Inc. and the Electric Power-Research Institute will team up in a second phase of a retail-wheeling pilot program study. The expanded study will include California, Massachusetts, Illinois and New York. Competitors, market share and sales strategies will be assessed. XENERGY first started the survey in July 1996. More than 40 utilities sponsored the research. The first phase focused mostly on New Hampshire, but also targeted electricity deregulation in the 50 states. Phase two, focusing on commercial-industrial customers, ends June 1997.

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Congressmen Working To Eliminate Federal Payments to TVA By Restructuring

Responding to a call by Tennessee Valley Authority's Chairman Craven Crowell to eliminate the $106-million, annual appropriation provided to it, Representatives Bob Franks (R-NJ.) and Marty Meehan (D-Mass.) on Feb. 5 introduced a bill to end that federal payment.

The congressmen, who also co-chair of the Northeast-Midwest Congressional Coalition, distributed a study outlining the $1.2 billion in annual indirect taxpayer subsidies provided to TVA.

Byline: 
Lori A. Burkhart
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Western Resources Wins Fight for KCPL

After months of trying, which included the derailment by Western Resources of the proposed merger of UtiliCorp United and Kansas City Power & Light Co., the boards of directors of Western Resources and Kansas City P&L have approved a merger of the two companies in a stock-for-stock transaction valued at $2 billion. If approved by the necessary regulatory authorities, the new company would have $9.5 billion in assets, $3 billion in annual revenues and more than 8,000 MW of electric generation.

Byline: 
Lori A. Burkhart
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In Brief...

Sound bites from state and federal regulators. Gas Load Building. Finding no protest from electric utilities, North Carolina waives requirements for preliminary cost-benefit analysis and approves incentive programs for Piedmont Natural Gas Co. Inc., designed to boots gas load by installing commercial gas cooking equipment at community colleges for use in culinary degree programs. Commission tells company to conduct a cost-effectiveness analysis as soon as it can gather the necessary data from actual operating experience. Docket No. G-9, Sub 377, Jan. 31, 1997 (N.C.U.C.).

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Carolinas Move Toward Restructuring

North Carolina and South Carolina, both relatively low-cost power states, recently have made moves toward competition. In North Carolina, bills calling for the formation of a study commission to examine the introduction of electric supplier choice in that state were introduced in the House (H.B. 12) and Senate (S.B. 38). The intent to introduce choice has prompted the North Carolina Coalition for Customer Choice in Electricity to call on legislators to develop a report by April 1998, in time for a bill to be considered by the General Assembly that same year.

Byline: 
Lori A. Burkhart
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LDC Fails in Bid To Recover Coal Tar Cleanup Costs

The Indiana Court of Appeals has upheld a ruling by state regulators denying permission to Indiana Gas Co. to recover costs associated with the cleanup of environmental contamination at former gas manufacturing sites.

The court could find no direct connection between coal tar cleanup and the current provision of gas distribution service, which it described as a necessary condition for cost recovery, even if the property is currently in use by the utility.

Byline: 
Phillip S. Cross
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New York Aims for Flexible Rates

The New York Public Service Commission on Feb. 12 pushed toward competition by approving a multi-utility pilot program for electric retail access for commercial farms and food processors, and by allowing utilities to use their flexible-rate programs to compete against economic-development power offered by the New York Power Authority (Docket 97012/94EO385).

The Dairylea farming cooperative had asked the commission to approve a pilot open to commercial farms and food processors, except those that already have flexible rate contracts. The PSC agreed.

Byline: 
Lori A. Burkhart
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Ohio To Look at Emissions Trading in Fuel Clause Cases

The Ohio Pubic Utilities Commission has approved a series of amendments to its rules on fuel cost adjustments for electric utilities, implementing previously approved guidelines for the ratemaking treatment of emission allowance transaction activities.

In the earlier ruling, the commission had found that its Electric Fuel Component rate mechanism provides the most appropriate forum for review of emission allowance plans, transactions and recovery of associated costs.

Byline: 
Phillip S. Cross
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