FERC ALJ Approves Three-Way Combo

An administrative law judge at the Federal Energy Regulatory Commission has recommended approval of the proposed three-way merger of WPL Holdings, IES Industries, and Interstate Power Co. to form Interstate Energy Corp.

Earlier this year, the companies and the FERC staff reached an agreement on market power mitigation. One stipulation was that the utilities had to contract for purchase of transmission capacity to interconnect the three utility systems. A portion of that capacity would be made available to other utilities on a first-come basis.

DOJ Sues Utility for Threats, Bribes

The U.S. Department of Justice is suing Rochester Gas & Electric Co. for allegedly threatening and attempting to bribe the University of Rochester and for its anti-competitive power supply contract with the school.

The Justice Department called the suit an "effort to loosen the stranglehold" the utility has over the university providing electricity to Rochester.

The lawsuit, filed June 24 in U.S. District Court for the Western District of New York, claims that Rochester Gas & Electric tried to coerce the university into abandoning plans to build a cogeneration plant.

FERC Deals with Vertical Market Power in Mergers

In two separate cases, the Federal Energy Regulatory Commission for the first time has approved an analytical framework for examining vertical market power concerns raised by convergence mergers of gas and electric companies. This new framework applies when market power in one sector (such as natural gas) threatens competition in another (e.g., electricity).

In the first case, the FERC on June 25 conditionally approved the disposition of jurisdictional facilities in the proposed merger of two holding companies, Enova Corp.

Special Report

Midwest panel fears service decline, sees small companies as speed bumps on road to competition.

"Mergers and restructuring" could have described the panel, but "Four Weddings and a Funeral" gave the session the cinematic spin it demanded.

Craig A.

Perspective

Uncle Sam buys a lot of power. Who supplies it may depend upon Article I, Sec. 8, Clause 17.

Today's intense competition to sell power should not overlook one large customer - the federal government. The Department of Defense alone consumed $1.4 billion worth of power in fiscal year 1994. Recently, one utility executive was quoted as saying: "We've got power marketers foaming at the mouth for DOD's business."%n1%n

Yet how does a marketer get the business of a federal agency, office or installation if retail wheeling is not mandated?

A Merger of Equals

While I read with interest and appreciated your story on electric and natural gas convergence ("Electric/Gas Convergence, Meter to Meter," May 1, 1997, p. 26), I must bring to your attention a misinterpretation concerning the proposed merger of Pacific Enterprises and Enova Corp.

In the second paragraph of your story, you said that Enova "is set to acquire Southern California Gas Co.

Customers Come First

Bruce Radford's May 15 "Frontlines" (p. 4) commentary on the Sears Tower/QST cogeneration project misses the point. I would like to correct his misconceptions and clarify the issues by looking at them from a marketplace viewpoint rather than a utility-based viewpoint.

First of all, the Sears Tower's savings are more than an "allegation." QST's proposed cogeneration facility for the Sears Tower will reduce the cost of electric power supply to the tower by about $2 million per year compared to what it costs under ComEd's current rates.

Pilot Program Nearly Perfect

In reference to your May 15 article, "Report Finds Problems With Choice Pilot" ("Headlines," p. 16), following is the industrial customers' response to the report.

STATEMENT

On May 7, 1997, a group of large industrial consumers of electricity on the Illinois Power Co. system, referred to as the Illinois Industrial Energy Consumers, filed a response to a recently submitted report by Illinois Power Co., pertaining to the Direct Energy Access (DEAS) report.

Pricing Transmission Constraints

Your editorial in the June 1, 1997 issue ("PJM's Brave New World," p. 4) provided a perceptive analysis of the Pennsylvania transmission pricing debate. As you point out, standard economics defines the value of a transmission constraint as the difference between the price of electricity on one side of the constraint and price on the other side. There can be no dispute over this statement; however, this straightforward theory is not always correctly applied.

In the case of electricity, the marginal running cost (or energy price) cannot be used to determine the value of a constraint.

Utility Files Suit Against Whistleblower Law

Northeast Utilities has filed suit asking the Federal District Court in Hartford to declare unconstitutional a new state whistleblower law, which became effective May 27.

The utility said that while it agrees with the intent of Public Act No. 97-60, the law violates the constitutional rights of employers. The law would prevent utilities and related businesses from retaliating against an employee that goes public about alleged wrongdoing by a company. Northeast Utilities believes it denies employers a reasonable time to investigate and respond to employee complaints.