Fortnightly Magazine - October 15 1997

California PUC Issues Final Rate Unbundling Order

The California Public Utilities Commission issued its final order on unbundling rates for generation, transmission and distribution functions performed by the state's three largest investor-owned utilities on Aug. 1.

The commission also determined how to calculate transition costs and addressed customer billing and education issues. (Decision 97-08-056, Docket A. 96-12-009 et al.)

The utilities affected are Pacific Gas and Electric, San Diego Gas & Electric, and Southern California Edison.

Rates by Function.

LDC to Recoup Loss from PUC Error On Goodwill

The Minnesota Supreme Court has ruled that Minnegasco may recover revenues it had lost when the state public utility commission improperly cut rates to recognize goodwill supposedly contributed by ratepayers to an unregulated affiliate.

An intermediate appeals court had agreed that the rate cut was improper, but had believed that the rule against retroactive rate making had barred any commission move to recoup the money for the utility.

The case involved an unregulated utility affiliate that performed appliance repair service.

Gas Accord Unlocks PG&E Market Hold

The California Public Utilities Commission has approved "Gas Accord," a settlement that enhances competition by restructuring the way natural gas is bought, sold and transported (Decision 97-08-055, Docket A.92-12-043).

"This is a landmark step to further deregulate the natural gas industry here in California," said Jack Jenkins-Stark, PG&E senior v.p. "These changes parallel those in the electric industry."

The collaborative settlement unbundles rates for transporting natural gas on PG&E's system.

Vermont Slaps Utility With Fines, Rate Reductions

Finding "a long and persistent record of misconduct and mismanagement," the Vermont Public Service Board has ordered Citizens Utility Co. immediately to reduce rates by 16.53 percent and pay fines totaling $60,000.

The board also reduced the company's return on equity from 10.5 to 5.25 percent, citing what it said were improper accounting practices, permitting failures and other bad management practices.

SoCalEd Begins Plant Auction

Southern California Edison has begun auctioning its 12 gas- and oil-fired generation plants. The plants boast an operating capacity of about 10,000 MW and a combined value of about $700 million.

The auction is being conducted in two phases. The first phase began Aug. 5, when SoCalEd sent out a confidential offering memo for its five "non-must-run" plants. The second phase took place in late August, when SoCalEd auctioned "must-run" plants.

Court Dismisses Telephone "Rounding Up" Complaint

A New York appeals court has dismissed a claim for damages brought by a telephone consumer complaining that he had been defrauded by a local telephone carrier's policy of rounding up charges to the nearest whole-minute increment.

The consumer claimed that the carrier, NYNEX Corp., had "secretly and fraudulently" followed a policy of charging for phone calls in whole-minute increments only. The consumer charged the company with violation of the state's public utilities laws, common law fraud, negligent misrepresentation and false advertising.

Retail Gas Choice Ok'd in N.M.

The New Mexico Public Utility Commission has approved a natural gas restructuring plan for Public Service Co. of New Mexico.

The plan allows residential gas customers and small businesses using less than 10,000 therms per year to select gas providers; some as early as December (Case No. 2760).

According to David Warren, PUC executive director, the commission opened natural gas to competition 10 years ago, but because of various barriers, customers didn't take advantage of it. PSNM, for example, continued to charge exiting customers a $35-per-month rental fee.

Gas Transport Service Releases Storage to Marketers

To help gas customers take advantage of unbundled services, the New York Public Service Commission has authorized National Fuel Gas Distribution Corp. to modify its existing firm transportation service procedures to allow marketers to gain access to a share of utility storage capacity, for use in delivering the required volume of gas to the city gate.

In another ruling, the commission approved a similar, but less innovative storage proposal for firm transportation customers served by Central Hudson Gas & Electric Corp.

Moody's Southeast IOUs Can Compete

Investor-owned utilities serving the Southeast U.S. are well-positioned to face increasing competition, but the region's municipal joint power agencies and electric co-ops may face serious losses.

That's the finding of a Moody's Investors Service regional study, the fourth in a series.

The "Southeast Electric Break-Even Analysis" estimates $24 billion in stranded costs for the region, with cooperatives and JPAs holding a disproportionately high portion of the per-kilowatt costs.

Off Peak

Each is unique, whether big or small, niche or mass-market.

Downsizing. Deregulation. Open access. That ought to boost both supply and demand for utility consultants, as unemployed middle managers seek out new careers and utilities struggle to survive in a more competitive and faster-moving environment.

However, since consultants come in many colors, which is right for you and your company?

Diversified Monoliths

As the giants of the consulting world, this category includes firms such as McKinsey, Andersen Consulting, The Big Six consultancies, and Booze-Allen.