Fortnightly Magazine - May 15 1997

Report Examines Fuel Trends

According to a new study by Resource Data International, the annual Outlook for Coal and Competing Fuels, U.S. electric load growth is accelerating, with actual utility generation growth expanding at rates comparable to the nation's real economic growth rate for the past two years.

Several electric measures suggest that in the mid-1990s, the nation is becoming more electric intensive. The 1996-1997 report suggests the nation's coal producers should see firm prices and strong demand growth in most producing regions in 1997.

In Brief...

Sound bites from state and federal regulators.

Pole Attachment Rates. Michigan PSC adopts new costing method to set utility pole attachment rates, aimed at developing competition in telecommunications services and discouraging investment in duplicate facilities by new market entrants. It cautions that changes in markets or regulatory environment might prompt a reconsideration. Case Nos. U-10741 et al., Feb. 11, 1997 (Mich.P.S.C.).

Internet Tariff Posting. New York PSC authorizes New York State Electric and Gas Corp.

Electric Lite Causes Concern at PSC

Competitive electric provider Electric Lite has drawn the attention of the South Carolina Public Service Commission with its promises of guaranteed rate reductions of 20 percent.

Electric Lite intends to compete against South Carolina investor-owned utilities for customers when the Legislature opens the market to competition.

The proposed "Competitive Power Act," if approved by the Legislature, would open the state's electric markets to competition in January 1998.

States Review Winter Gas Hikes

Two states have decided to review the high cost of gas this past winter and the effect the price hike has had on the states' gas utilities.

Florida. While granting requested rate relief on an "expedited basis" to Florida Public Utilities Co., the Florida Public Service Commission said it would conduct a prudence review of the purchased gas costs during its next scheduled PGA audit proceeding.

Pa. Commissioner Disagrees

According to Robert Bloom, a commissioner at the Pennsylvania Public Utility Commission, an article in the Philadelphia Inquirer regarding the release of the 1996 report card on Pennsylvania utilities contained "misinformation" and was "distorted."

That article reported the PUC refused to issue the 1996 report card because the commissioners disagreed on the amount of performance information that should be released in the new competitive environment (see "Headlines," FORTNIGHTLY, 3/15/97).

Nevada Proposes Recovery of Stranded Costs

The Nevada Public Service Commission has issued a policy statement on recovery of "past costs" incurred by electric utilities in the state, asking for comments in its ongoing investigation of restructuring in the electric industry.

In the policy statement, the commission proposes to set up a "rebuttable presumption" favoring full recovery of all costs maintained on the books by Nevada utilities.

Virginia Power Proposes Freeze

Virginia Power Co. has asked the Virginia Corporation Commission to freeze its base electric rates through 2002, which would set the average residential electric bill in 2002 at virtually the same as it was in 1992.

The base rate freeze is part of an alternative regulation plan submitted to the commission on March 24, which is designed to ensure stability for electric customers and shareholders during the move toward more competitive markets.

Utility to Invite Bidding on Its Discounted Rate Contracts

Central Maine Power Co. has agreed to allow other providers of wholesale electric power to bid for the right to supply energy to the utility for resale to utility customers who enjoy special discounted rate contracts.

It would carry out its agreement if and when the state of Maine should decide to open its retail electric market to competition.

The utility's promise to allow competitive suppliers to bid the special-rate contract load paved the way for the Maine Public Service Commission to approve new multi-year contracts offered by the utility to two large customers.

Half-Hearted Competition Christopher Seiple & Barbara O'Neill

With the implementation of the Energy Policy Act and the FERC's Orders 888 and 889, competition has been introduced into wholesale power markets. It is limited in scope, however, as utilities are still able to recover their fixed generation costs and embedded cost of capital from their captive retail markets. This limited competition impedes progress towards the development of a more efficient generation system in the U.S. and provides only modest benefits to retail customers.

Currently, generators compete only in wholesale markets and not in retail power markets.

Divestiture Moves Forward

New England Electric System has received preliminary proposals from 25 potential buyers for the purchase of its generation business.

The proposals, which were due March 25, are from utility affiliates, independent power producers, and energy companies.

New England Electric System noted that buyers would gain an immediate presence in the regional energy market, which opens to competition in mid-1997 for some Rhode Island customers, and in January 1998 for Massachusetts and New Hampshire customers.