Fortnightly Magazine - October 15 1995

Mailbag

Nice Try!American Gas Association president and CEO Michael Baly's response to my article ("Electric Reliability: How PJM Tripped on Gas-fired Plants," May 1, 1995) concerning the January 19, 1994, rolling blackouts in the PJM power pool is damage control that fails. Here are the facts that Mr. Baly either ignores or distorts:

Forty percent of PJM's coal generation did not operate during the rolling blackouts. At least 80 percent of PJM's total generation where gas was the primary or sole fuel did not operate when needed.

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Colorado Opens LEC Market

The Colorado legislature has enacted a new law designed to increase competition in the state's local telecommunications market (H.B. 95-1335). The statute directs the Colorado Public Utilities Commission (PUC) to remove all barriers to entry into the local telecommunications market "as soon as is practicable." State regulators are encouraged to use "interim marketplace mechanisms" where competition is not immediately possible, with the ultimate goal of replacing the existing regulatory framework with a fully competitive state telecommunications market.
Byline: 
Phillip S. Cross
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Utilities to Pool Power, Resources

General Public Utilities Corp. (GPU) and New Jersey Resources Corp. (NJR) have announced a pooling plan to manage the natural gas supply and capacity portfolios for up to 25 gas-fired generating stations that supply the GPU system in New Jersey and Pennsylvania. The pool will contain up to 1,100 megawatts of nonutility generation presently under contract with the GPU companies, as well as the companies' own generation. NJR will procure gas and provide other fuel-management services in conjunction with GPU system power dispatchers.

Byline: 
Lori A. Burkhart
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Federal Appeals Court Upholds EWG Safe Harbor Regs

Turning back a challenge by the National Association of Regulatory Utility Commissioners (NARUC), the U.S. Court of Appeals for the District of Columbia Circuit has upheld federal regulations relaxing scrutiny of investments in exempt wholesale generators (EWGs) by electric utility holding companies.
Byline: 
Phillip S. Cross
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Minnesota Coalition Joins Debate

A broad coalition of Minnesota electric cooperatives, municipal utilities, consumer advocates, and environmentalists has joined the debate over the restructuring of the state's electric industry.

Byline: 
Lori A. Burkhart
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TEP's Holding Co. Status on Hold

The staff of the Arizona Corporation Commission have recommended rejection of a Tucson Electric Power Co. (TEP) proposal to form a holding company, with TEP becoming a wholly-owned subsidiary. The proposal reflects TEP's desire to pursue opportunities in the domestic and international power markets, including development of independent power projects, acquisition of interests in existing power facilities privatized by foreign governments, and construction of cogeneration facilities to serve the energy needs of large industrial customers.

Byline: 
Lori A. Burkhart
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Southwestern Merger: A New Breed

Southwestern Public Service Co. (SPS) and Public Service Co. of Colorado (PSCC) have entered into a definitive merger agreement to form a public utility holding company that will cover one of the largest geographic areas in the nation. Size apart, the merger is unique in that SPS operates as part of ERCOT, and the two utilities are not interconnected. A new transmission line will be built to connect the two companies.

The new holding company will have combined annual revenues of $3 billion, and assets of $6 billion.

Byline: 
Lori A. Burkhart
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S&P: Municipal Tactics as Effective as Mergers

Standard & Poor's (S&P) CreditWeek Municipal notes that municipal electric utilities are resisting the investor-owned utility (IOU) merger trend in favor of competing through internal cost controls and sharing of services. The main reason, according to S&P directors Marla Fox and William Cox, is that municipals are political entities governed by city councils or appointed boards, and mergers would result in less authority for those decisionmakers.

Byline: 
Lori A. Burkhart
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Central Illinois Proposes Direct-access Pilots

Citing a need to prepare for the emerging competitive marketplace, Central Illinois Light Co. has volunteered to experiment with direct access for all of its customers. The utility has asked the Illinois Commerce Commission to consider two separate pilot programs that will allow customers to purchase some or all of their power requirements from other suppliers.

Byline: 
Lori A. Burkhart
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Mortgaging Your Conservation: A Way Out for Stranded Investment?Andrea L. Kelly and Donald E. Gaines

When an electric utility invests in a resource to serve its customers, it does so with the belief that the asset underlying the investment can be pledged as collateral to secure debt capital. But what happens if the asset is not owned by the company and, therefore, provides no collateral? The following situations illustrate:

Situation A

Electric utility "A" chooses to build a small generating plant to meet the future needs of its growing customer base.

Byline: 
Andrea L. Kelly and Donald E. Gaines
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