The California Public Utilities Commission (CPUC) has approved a proposal by San Diego Gas & Electric Co. (SDG&E) to switch to an automatic adjustment mechanism to determine cost of capital (em a move that could save the utility approximately $100,000 per year in regulatory costs.

A new law could help New York utilities reduce electric rates

and improve their balance sheets.

Legislation recommended by Gov. Pataki on June 1, 1996, seeks to provide the New York Public Service Commission (PSC) with a new financial tool to address possible stranded costs as the state moves toward a competitive retail electric market.

Sound bites from state and federal regulators.

Economic Development Rates. Michigan rescinds existing guidelines for economic development rates in favor of "case-by-case" development and review. Case No. U-11065, July 16, 1996 (Mich.P.S.C.).

Least-cost Planning. Maine considers repeal of obsolete portions of its least-cost planning regulations for electric utilities. Dkt. No. 96-371, July 9, 1996 (Me.P.U.C.).

Gas System Acquisitions. Alabama allows Alabama Gas Corp. to buy municipal gas distribution system and include purchase price in rates. Dkt.

A divided Federal Energy Regulatory Commission (FERC) has set for expedited hearing the proposed merger between Baltimore Gas and Electric Co. (BGE) and Potomac Electric Power Co. (PEPCO) to form "Constellation Energy Corp.," to determine its effect on competition (Docket Nos. EC96-10-000 and ER96-784-000).

It will also consider the applicants' proposed open-access transmission rates. An administrative law judge will certify the record to the FERC by November 1.

The FERC has proposed major revisions to the secondary market for interstate capacity, offering interstate pipelines and holders of interstate capacity the opportunity to participate in experimental programs to help determine the effectiveness of the proposed changes (Docket Nos.

The Federal Energy Regulatory Commission (FERC) announced that qualifying facilities (QFs) that fail to meet the standards needed to retain QF status will be required to file wholesale rates for sales during the period their facilities do not comply (Docket Nos. EL94-45-001 and QF88-84-006).

The FERC asked QFs to be as vigilant as possible. The new policy states that if a QF fails to comply with the regulations, fails to receive a FERC waiver excusing the lapse, and then returns to noncompliance, the QF will be required to file rates for the noncompliance period.

The Federal Energy Regulatory Commission (FERC) has issued two orders that indicate for the first time how it would implement the prohibition against "sham" transactions under the Energy Policy Act. The separate decisions involve requests by two municipalities for orders requiring utilities to wheel power.

In one order, the FERC denied a request by the City of Palm Springs, CA, for electric transmission service from Southern California Edison (SCE) under sections 211 and 212 of the Federal Power Act (FPA) (Docket No. TX96-7-000).

To what extent should the independent system operator (ISO) and the spot market (Power Exchange) remain separate? Thinking about how the ISO must operate leads to certain conclusions.

Of necessity, the ISO will operate a noncontract market. That is, the ISO will match some supply and some demand that are not covered by generator-customer contracts.

The Washington Utilities and Transportation Commission (UTC) has approved a settlement agreement allowing Cascade Natural Gas Corp. (CNG) to increase its rates by $3.8 million a year starting August 1, 1996.

CNG will also hike its monthly service charge to residential, commercial, and core industrial customers by $1 on August 1, 1997, and by another $1 on August 1, 1998. The utility says the revenue increase would be offset by concurrent decreases in rates for transportation customers.

Southern California Gas Co. (SoCalGas) has taken issue with the coal industry's opinion that lower electric rates from restructuring would increase electricity use, and that strict environmental regulations would require meeting the increased demand with out-of-state generation.

"These coal industry groups suggest that electricity demand will rise because cheap coal-fired electric power (em generated in Arizona and elsewhere (em will now be available," said Lee Stewart, a SoCalGas senior vice president.