Fortnightly Magazine - October 15 1996

Staff Report Wants "Go Slow" Restructuring

A 400-page report by Virginia State Corporation Commission staff concludes that Virginia's best interest will be served by a slow and carefully analyzed move toward electric utility competition, rather than by immediate, massive restructuring.

Maine Plan Would Spin Off Generation

A draft plan issued by the Maine Public Utilities Commission (PUC) to restructure the state's electric industry, currently under review at the state legislature, would require investor-owned utilities to separate operation of generation assets from the rest of the company by 2000, and to divest themselves of those assets by 2006.

The plan would also require retail electric suppliers to maintain a minimum block of renewable supply, and recommend that the state legislature fund low-income assistance currently provided as part of utility rate structures through a general tax

R.I. Legislates Restructuring

Rhode Island Gov. Lincoln Almond has signed the state's new legislation on electric restructuring, known as "The Utility Restructuring Act of 1996" (Public Law Chapter 316), which mandates customer choice by July 1, 1998, or sooner if neighboring states offer retail access before that time.

The law authorizes a 2.8-cent-per-kilowatt-hour stranded-cost surcharge, but allows compensation only for those assets that the Rhode Island Public Utilities Commission (PUC) deems eligible for recovery in prior rate cases or settlements.

Marginal Cost Drives Electric Rate Design

The Maine Public Utilities Commission (PUC) has approved a new multi-year revenue requirement and rate design plan for Maine Public Service Co. (MPS) designed to serve as "the starting point for MPS and its customers' participation in an increasingly competitive market."

The plan allocates an overall revenue increase of 4.4 percent to produce a 5.5-percent increase in residential rates and a 7.5-percent hike in commercial rates. Other customer groups will see smaller boosts in rates or slight reductions.

NiMo Seeks to Buy Out IPP Contracts

Niagara Mohawk Power Corp. (NiMo) has offered to terminate 44 contracts, constituting 90 percent of electricity bought from independent power producers (IPPs), in exchange for a combination of cash and securities.

NiMo claimed the move would allow implementation of its PowerChoice proposal, which would permit customers to choose their electric supplier. The plan calls for NiMo to create a separate, nonnuclear generating company. Although details remain confidential, NiMo chairman and CEO William E.

Indiana Launches LEC Competition

The Indiana Utility Regulatory Commission (URC) has opened the state's local telephone market to competition by ordering local exchange carriers (LECs) to offer "bundled resale" of retail local exchange and related services.

The ruling applies to the state's two major LECs, Ameritech and GTE North, as well as to other smaller companies subject to the provisions of the federal Telecommunications Act of 1996 (Act).

Amended Cajun Plan Lowers Rates

Ralph R. Mabey, trustee in the Chapter 11 bankruptcy proceedings of Cajun Electric Power Co-op., has entered into an amended asset-purchase agreement with Louisiana Generating LLC for the purchase of Cajun's nonnuclear assets. Louisiana Generating LLC is the joint-venture affiliate of NRG Energy, Inc. and Zeigler Coal Holding Co.

The NRG/Zeigler bid was selected in April, but on July 15, the bankruptcy court rejected the plan's buyer-protection provisions.

Telco Business Services Ruled Noncompetitive

An Illinois appeals court has upheld a ruling by the Illinois Commerce Commission (ICC) that certain services offered to business customers by Illinois Bell Telephone Co. are noncompetitive.

The local exchange carrier (LEC) had reclassified the services (distance-sensitive calls, credit card calls, and operator assistance) as competitive to take advantage of pricing flexibility permitted under the ICC's regulatory reforms for the industry.

Telephone Rate Plans Said to Frustrate Competition

The Office of the Ohio Consumers' Counsel has gone on record at the Ohio Public Utilities Commission (PUC) as opposing any application by Cincinnati Bell Telephone Co. to amend its present alternative regulation plan to set rates using a price cap tied to the consumer price index, and to deaverage rates.

The Consumers' Counsel claims that the amendment must be considered as a new plan due to the substantive changes it proposes. It adds that, if enacted, the changes would impose rate hikes and discourage consumer choice for local calling.

Oregon Unbundles LEC Rates

The Oregon Public Utility Commission (PUC) has unbundled services offered by the state's major local exchange carriers (LECs) into a series of network building blocks, pricing the new service offerings in conformance with policies adopted in earlier cases. The ruling retains statewide average rates for local exchange service across all density and distance categories.

The PUC also required the LECs, U S WEST Communications, Inc. and GTE Northwest, Inc., to impute the price they charge to other carriers for basic network functions when setting their own prices.