Fortnightly Magazine - June 15 1997

Legislative Briefs

State-by-state prospects for electric customer choice.

New Mexico. Public Service Co. of New Mexico asks state PUC to begin collaborative process to draft legislation to allow retail choice of electric suppliers (Case No. 2681). Draft would be proposed to the state's Interim Legislative Committee on integrated Water and Resource Planning, for possible passage in the 1998 legislative session. By mid-June, the utility intends to initiate a plan to allow customer choice by a date certain, defining methods to handle stranded costs and reliability.

Nevada. Nevada Power Co.

N.J. Cautious on Gas Adjustment Clause Reform

Citing concerns about gas price volatility, the New Jersey Board of Public Utilities has ruled that Public Service Electric and Gas Co. should maintain its existing annual fuel cost adjustment mechanism rather than shift to a monthly charge as originally proposed for its local gas distribution customers.

Under a settlement approved by the board, the LDC will have the option to impose the monthly charge on its general-service and large-volume customers.

Power Shortages Loom With Shutdowns

Midwest and New England Are Threatened

To head off potential problems, states in the Midwest and New England are reacting now to impending plant shutdowns, which are threatening to cause serious electric supply shortfalls this summer.

The Midwest. The shutdown of Wisconsin's two nuclear plants, Kewaunee and Point Beach, is predicted to cause the state's worst power shortage. In addition, up to five coal-fired plants were scheduled for maintenance shutdowns. To deal with the anticipated shortage, the Wisconsin Public Service Commission on April 22 adopted an emergency plan.

Texas Orders Nuclear Write-Down

In the first major rate proceeding under a new state law bringing competition to the wholesale electric market, the Texas Public Utility Commission has ordered Central Power and Light Co. to accelerate recovery of above-market generating investments and reduce and unbundle its rates.

The commission said the aging of existing electric facilities and the development of new technologies were driving generation costs down.

ConEd Wants Controversial Industrial Rate Cut

A controversial electric restructuring settlement proposed by Consolidated Edison Company of New York to the New York Public Service Commission, which includes a 25-percent rate cut for some industrial customers, was attacked as hostile to small customers.

ConEd filed the plan in response to the PSC's efforts to develop a new framework for the state's electric industry in its "Competitive Opportunities" proceeding (Case 97018/96EO897). ConEd's proposed five-year plan would run through March 31, 2002 and cut rates by $655 million.

Proposal Details.

Ohio Examines Electric Competition in Cleveland

The Ohio Public Utilities Commission has rejected a request by Cleveland Electric Illuminating Co. to expand its competitive discount pilot program into the western portion of the city. The program currently targets commercial customers in the eastern side of the city.

While finding that competition does exist "to some degree" on the west side of Cleveland, it does not encompass the entire area targeted by the utility's proposal, the commission said.

Competition to Shut GPU Nuclear Plant

The owners of General Public Utilities Corp. are planning either to sell or shut down Oyster Creek nuclear plant, because they claim the plant's above-market electric prices will not be competitive in an open market. The selling price would be set around $700 million.

According to GPU President and COO Fred D. Hafer, the electric generated at Oyster Creek costs the utility about 1 cent to 1.5 cents more per kilowatt-hour than the current market price for energy.

Pennsylvania Reviews Gas Balancing Charges

The Pennsylvania Public Utility Commission has authorized PG Energy Inc. to implement several tariff modifications

regarding balancing charges and transportation service requirements.

It permitted the LDC to impose a balancing charge of $0.66/Decatherm per unit of imbalance on transportation customers and aggregators whose actual daily deliveries of gas vary by more than 2.5 percent of requirements. The commission rejected a proposal to reduce the balancing charge to account for the offsetting nature of usage among transportation users as a whole.

New Jersey Issues Restructuring "Master Plan"

The New Jersey Board of Public Utilities has issued its final master plan on electric restructuring, which could cut electric rates by 10 to 15 percent starting October 1998. The plan allows all customers to choose electric suppliers by July 2000.

The board now will submit "Restructuring the Electric Power Industry in New Jersey: Findings and Recommendations" to the governor and Legislature.

The plan would phase in retail choice, beginning with 10 percent of all residential, commercial and industrial customers, in October 1998.

Off Peak

Downsizing has trimmed the work force, but utilities may have given up those savings by going outside to purchase labor, goods and materials. Electric utilities might be overlooking the obvious (em the rapidly increasing costs of purchased goods and services (em while trying too hard to trim internal costs through downsizing and personnel cuts.

While utilities cut labor costs by less than 1 percent per year from 1992 to 1995, the costs of purchased goods and services rose by an average of more than 4 percent each year (see Chart 1), according to a study of utility economics by A.T.