Fortnightly Magazine - December 1996

Energy/Telecom Combo Hits Boston

Boston Edison Co. (BE) and RCN Inc., a subsidiary of C-TEC Corp., have announced what they say is the "most comprehensive agreement in the nation" between an electric utility and a broadband network company to provide one-stop shopping for energy and telecommunications services.

The two companies have signed an agreement to form a joint venture to provide local- and long-distance telephone service, video, high-speed internet access, and eventually, energy-management and property-monitoring services.

Gas LDC to Unbundle

While authorizing Northern Utilities, Inc., the sole instate natural gas local distribution company (LDC), to contract with an affiliated company to provide storage capacity and services, the Maine Public Utilities Commission (PUC) has directed the utility to file an unbundling tariff proposal that includes transportation, load-balancing, and third-party merchant services.

Under the approved supply arrangement, Granite State Gas Transmission, Inc. will provide storage capacity and service from a liquefied natural gas facility in Wells, ME.

GA PSC OKs Discount Contract

The Georgia Public Service Commission (PSC) has approved its first negotiated contract for discounted electric rates under an economic development incentive plan adopted in 1994.

Georgia Power Co. filed the contract in May after Olin Corp. announced it would relocate 100 manufacturing jobs to Tennessee unless the company could negotiate power rates.

Mass. Pins Telco Competition to TSLRIC

The Massachusetts Department of Public Utilities (DPU) has decided to use separate cost methods 1) to determine whether a local telephone service is subsidized, and to set price floors for essential monopoly services provided by NYNEX, a local exchange carrier (LEC); and 2) to set rates and price floors for competitive services.

According to the DPU, Total Service Long Run Incremental Cost (TSLRIC) was undisputed as the proper method of testing for subsidies between services.

Gov./ACC Squabble Over Arizona's Restructuring

Utilities in the Western Systems Coordinating Council, especially those in Arizona, found out last summer what it's like when 600,000 consumers lose power. This event, however, was just a warmup for the fireworks that followed and then promptly fizzled.

The outage prompted a series of highly publicized letters between Arizona's Republican Gov. Fife Symington and Renz Jennings, the Democratic chairman of the Arizona Corporation Commission (ACC), which has been investigating retail electric competition since 1994.

Idaho Reforms QF Rules

The Idaho Public Utilities Commission (PUC) has modified the method electric utilities must use to conduct avoided-cost negotiations with qualifying cogeneration facilities (QFs). A new interim standard for large QF projects (greater than 1 megawatt) calculates avoided costs based not on displaced purchases from a single, hypothetical power plant, but on information in the utility's resource plan.


The spectre of retail competition in electricity presents some difficult but solvable technical problems in creating new markets. It could lead to a new world of regulation. At the least, it will expose some currently protected utilities to potential losses that could prove substantial.

This prospect of losses has inspired some high-cost utilities to mount a formidable defense of the status quo, coupled with an aggressive offense to shape the transition.

Penn. Updates Gas Transport Rules

The Pennsylvania Public Utility Commission (PUC) has adopted new rules for intrastate gas transportation tariffs filed by local distribution companies (LDCs) in the state. Earlier in the year it had issued a set of "tentative" regulations to serve as a basis for discussion of changes in the gas industry. See Re Gas Transportation Tariffs, 169 PUR4th 212 (Pa.P.U.C.1996).

According to the PUC, the final rules are based on a "reasonable sharing" of opportunities, risks, and obligations.

Marketing & Competing

Virtual DisCos? Utilities might be stepping out,

but outsourcers could be cutting in.Wholesale competition and the prospect of competitive retailing are leading many electric utilities to turn their distribution activities into discrete business units. But the emergence of the "DisCo" as a distinct entity may only mark the first step in a more radical disaggregation.

Why the distribution business may see radical change isn't immediately apparent.

Gas LDC Offers Residential Transport Options

The Pennsylvania Public Utility Commission (PUC) has authorized Columbia Gas of Pennsylvania, Inc., a local distribution company (LDC), to 1) expand transportation "to potentially capture all residential customers," and 2) institute a voluntary capacity-assignment pilot for residential and small commercial users only. The new transportation service will give residential customers the option of purchasing gas from a marketer by allowing them to aggregate in groups of up to 50 to meet the 5,000-Mcf volume threshold in the tariff.