The Oregon Public Utility Commission has approved a settlement agreement allowing Portland General Electric Co.

With doubts resolved over its legal authority, the Pennsylvania Public Utility Commission has issued "final-form" rules (but subject to legislative review) that allow an "operating-ratio" method as an alternate form of rate regulation for small water and wastewater utilities, many of which now face severe financial difficulties.

For added financial aid, the new rules also allow water utilities to create an emergency maintenance and operation fund as well as a reserve account, with both funded as "customer contributions in aid of construction."

Revenues Eaten Up.

A New York appellate court has rejected claims by sellers of a residential property located near a high-voltage transmission line in Westchester county that the utility owner of the line should pay compensation for a drop in property value allegedly due to public fears about electromagnetic fields.

The case turned on the court's interpretation of constitutional "taking" rules and the legal doctrine of "inverse condemnation.

"Invasion" Claimed. The sellers had sued Consolidated Edison Co.

The North Carolina Utilities Commission has permitted the state's major investor-owned electric utilities to suspend their

existing avoided-cost rate offers for long-term power purchases from qualifying cogeneration facilities, pending regulatory review.

The commission said it would also review a proposal by North Carolina Power Co. to reduce the eligibility threshold for the avoided-cost rates from the current capacity level of 5,000 kilowatts, to only 100 kW.

Consumers Would Overpay.

Liberalisation of the electricity markets in the UK and Scandinavia has driven merger activity in these territories. This was evident in 1996 with U.S. companies taking over MEB, East Midlands Electricity and Northern Electric, with London Electricity likely to follow in early 1997.

Applicants can only hope that a prompt review won't be even more difficult

By a unanimous vote, on December 18, 1996, the Federal Energy Regulatory Commission (FERC) issued Order No. 592, stating how it intends to evaluate utility mergers. The anticipation has ended, yet those hoping for a new approach and a quicker review are bound to be disappointed.

Order 592 is a "Policy Statement." As such, it only announces intentions; it imposes no new obligations and is not subject to judicial review until implemented in a specific case.

Models can overcome a key oversight (em

that both supply and demand affect competition.

This past December, the Federal Energy Regulatory Commission (FERC) issued a policy statement describing important changes in how it will evaluate proposed mergers under the Federal Power Act's public interest standard. These changes should lead to significant improvements (em not only in the evaluation of mergers, but also for other matters that affect market power, %n1%n including industry restructuring and market-based pricing.

Each assumes a vertical breakup, but watch out for securitization.

It can prove difficult to detect any overt difference of opinion among financial credit rating agencies. That appears to be the case in today's electric utility industry, where Moody's, Duff & Phelps, and Standard & Poor's each predicts that a breakup of the vertically integrated utility is now virtually inevitable. The result, they say, will leave us with an industry made up of disaggregated high-risk power generators, and lower-risk companies engaged in transmission, distribution, and other related services.

Prometheus paid dearly when he stole fire from the gods and gave it to man, but his courage paid off. Fire now belongs to the people. So should electricity, says New York state Judge Joseph Harris, of Albany, who ruled last fall that state regulators could force open New York's electric industry, but warned against hidden favoritism:

"Prometheus," wrote Harris, "in breaking the monopoly of the gods and by giving electrical energy to mankind ... [should] not be demeaned by a mere transfer of that monopoly to the lords of industry.

Jay P. Lukens, formerly a principal at Energy Market Economics, Inc., was hired by The Economic Resource Group, Inc., as managing director and principal of the company's new Houston office.

Edison Source tapped Aram G. Sogomonian, a former executive at Enron Capital and Trade Resources as its new corporate risk management v.p. Sogomonian was Enron's director of risk analytics and asset price, and also has worked at Unocal.

Larry Grossman, a senior v.p. at Cassidy & Associates, was retained by the Council on Superconductivity for American Competitiveness as executive director.