The Pennsylvania Commonwealth Court has upheld a ruling by the state Public Utility Commission (PUC) implementing a three-year, performance-based, gas-cost incentive program for Columbia Gas of Pennsylvania, Inc., a local distribution company (LDC). The program compares LDC spot-market purchases to the New York Mercantile Exchange (NYMEX) average, sharing any savings between the company and ratepayers. The court rejected allegations that state law forbids recovery in excess of prudently incurred actual costs.

purposes.)

The proposed guidelines are intended to facilitate a two-year pilot program under the PUC's roundtable on competition in the electric industry.

The Indiana Utility Regulatory Commission (URC) has adopted a new ratemaking policy for mergers involving water utilities: The URC will first look at the fair value of the acquired utility, as determined in its most recent rate case, to determine the reasonableness of the purchase price.

The Iowa Utilities Board (IUB) has set rates and terms for unbundled interconnection services that U S WEST Communications, Inc., a local exchange carrier (LEC), must provide to other carriers seeking to provide competitive local service. The IUB ruled that U S WEST must use the Total Service Long Run Incremental Cost method to set prices for the use of its facilities. It also ruled that the LEC may include "an appropriate markup" in the rates as well as a contribution to shared and common costs of the local loop.

The Georgia Public Service Commission (PSC) has adopted a set of policy guidelines to restructure and promote competition in local gas markets. The PSC said that a major problem is determining how smaller core customers can benefit: "Reliance on competitive market forces is preferable to regulation," but only when competition is effective and sustainable. To test for competition, the PSC will monitor: 1) the ability of providers to make functionally equivalent service readily available, and 2) the numbers and market strength of competitive providers.

The Ohio Public Utilities Commission (PUC) has struck down a prohibition against resale of electric service imposed by Toledo Edison Co. on owners and operators of commercial property. The PUC said that the case and other similar actions had begun as civil actions by landlords to collect back rent where disputes arose over the energy portion of monthly payments by tenants.

The Pennsylvania Public Utility Commission (PUC) has issued final regulations to guide the restructuring of intrastate transportation services offered by natural gas local distribution companies (LDCs) in the state. The PUC issued the new rules as a "tentative order" to allow additional comments from interested parties because of ongoing changes in the gas industry, and because over two years had passed since it issued proposed rules.

Sound bites from state and federal regulators.

Contel Merger. California removes stay on Contel/GTE merger. Orders equal sharing of short- and long-term economic benefits between ratepayers and shareholders. Fessler dissents, finding that the utility "had not established an entitlement to 50 percent of these savings." A.90-09-043, Decision 96-04-053, Apr. 10, 1996 (Cal.P.S.C.).

Local Telephone Resale. California requires two of the state's major LECs to offer a broad range of services for resale at wholesale rates.

Eleven members of the U.S. House of Representatives have written to Chair Elizabeth A. Moler asking the Federal Energy Regulatory Commission (FERC) to address competitive issues arising from the Public Utility Regulatory Policies Act (PURPA).

The Federal Energy Regulatory Commission (FERC) has refused to rehear or modify a June 15, 1995, rate order (Opinion 397) that denied Lakehead Pipe Line Partners, L.P. any income-tax allowance related to "curative allocations" under section 704(c) of the Internal Revenue Code that increase the general partner's taxable income beyond his or her proportion of company ownership.

The ruling (Opinion 397-A) affirms Lakehead's entitlement to a tax allowance based on the income attributable to corporate partners, but imposes a limit.