Fortnightly Magazine - August 1995


Robert S. Silberman has joined California Energy Co. Inc., the largest independent geothermal power producer in the world, as senior v.p. of project development and implementation.NUI Corp. has appointed James R. Van Horn general counsel and corporate secretary. Van Horn was previously senior v.p., general counsel, and secretary at Citizens First Bancorp. Inc.

The interim board of directors of WorldTel has elected Sam Pitroda chairman.

Maine Approves LEC Price-cap Plan

The Maine Public Utilities Commission (PUC) has approved a regulatory reform plan for New England Telephone and Telegraph Co., a telephone local exchange carrier (LEC). The plan includes a price cap program for "core" services (em that is, nondiscretionary services such as basic exchange and toll services. The price-cap structure and pricing rules will not apply to the LEC's noncore services.


Knowledge Gained

is Never Lost

In spite of ample arithmetical examples, the basic point made by Lawrence Kolbe and William Tye in "The Cost of Capital Does Not Compensate for Stranded-Cost Risk" (May 15, 1995) is simply wrong. The authors claim that "even if the cost of capital [reflects] full knowledge of the risk of stranded costs," it will not compensate for that risk.

Va Asserts Authority in Mini Case

The Virginia Corporation Commission has rejected claims that it has no jurisdiction over disputes involving attempts to municipalize electric service. The case involves a dispute between Virginia Electric and Power Co. and the City of Falls Church, VA.

Merger Terminated: Chess Game Contines

Central and South West Corp. notified bankrupt El Paso Electric Co. (EPE) on June 9 that it has terminated the companies' proposed merger. CSW had informed EPE on May 23 that it had breached the merger agreement by participating in discussions about and spending large sums on a possible stand-alone reorganization plan.

The CSW board of directors rejected EPE's request to extend the merger agreement for six months until December 8.

North Dakota Approves Certificates in Local Exchange Site

The North Dakota Public Service Commission (PSC) has approved new certificates for local telephone service for 68 exchanges sold by U S WEST Communications, Inc. to a group of independent telephone companies in the state. The PSC had prepared to perform a full examination of the $137.5-million sale, when the state legislature passed a new law eliminating its jurisdiction over the disposition of tangible assets by U S WEST.

Michigan Gets Retail Wheeling Rates

The Michigan Public Service Commission (PSC) has set rates and charges for delivery service for a five-year experimental retail wheeling program involving Detroit Edison Co. (DE) and Consumers Power Co. (CP). The program will be implemented the next time the utilities solicit new capacity (Case No. U-10143/10176). The ruling follows an April 11, 1994, PSC order approving the framework for the retail wheeling experiment. The rates pertain to industrial customers with 5 megawatts of retail delivery capacity that use about 3 million kilowatt-hours (Kwh) of electricity per month.

Nuclear Storage at Issue iin Minnesota Decommissioning Case

The Minnesota Public Utilities Commission (PUC) has reaffirmed an earlier decision

allotting another

14.8 years of service to two Prairie Island nuclear units owned by Northern States Power Co. The PUC turned back claims that it should shorten the remaining life estimate because the utility might be unable to secure offsite storage for spent fuel from the plant.

UPA Tries to Snag LILCO

The Long Island Power Authority (LIPA) plans to acquire the Long Island Lighting Co. (LILCO), to help reduce LILCO's high electric rates and improve Long Island's economy. To that end, LIPA has formed a public/private partnership with a private utility company that will provide extensive management services for LILCO. The utility partner has agreed to invest $100 million in the acquisition, contingent upon Gov. Pataki's approval. LIPA would create a subsidiary to acquire LILCO using tax-exempt bonds.

New Jersey Approves Gas to Electric Pricing

The New Jersey Board of Public Utilities (BPU) has approved a change in the method used by Public Service Electric and Gas Co. to determine the price of gas paid by its electric division to its gas division for volumes needed to generate electricity. The new method adds two types of service beyond the current all-interruptible classification. The new "dedicated" volumes will only be subject to interruption at temperatures of 20 degrees or below. In addition, demand charges will be estimated based on monthly volumes rather than fixed historical annual volumes.