The Massachusetts Supreme Court has vacated and remanded a Massachusetts Department of Public Utilities (DPU) decision on environmental externalities, agreeing with Massachusetts Electric Co. that the DPU had no authority to require electric utilities to select new power sources based on externality values that encompass costs ratepayers otherwise would not incur.
A recent rate order by the Pennsylvania Public Utilities Commission (PUC) granting West Penn Power Co. a $53.7-million increase has generated some disagreement between the state's utility commissioners on the issue of rate of return on equity (ROE). Although the PUC reduced the utility's proposed ROE from 12.5 to 11.5 percent, PUC chairman David W. Rolka and vice chairman Joseph Rhodes, Jr. both claimed the ROE was too high.
The California Public Utilities Commission (CPUC) has approved increases in the rate of return on equity (ROE) for the state's largest energy utilities, citing increasing interest rates and perceptions of risks in the electric industry. The CPUC approved increases of 70 to 120 basis points above the 1994 baseline ROE figure of 11 percent.
It explained that since utilities' ROEs were reduced as interest rates dropped, they should increase with the general cost of capital.
You can look at the title in two ways: (a) "The sky is falling," or (b) "There's nothing new under the sun." But both views are wrong. Let me explain.
No one doubts that state public utility commissions (PUCs) must change. But we need not throw up our hands in despair or smile and pretend we've seen it all before. Yes, PUCs have seen major changes before. The 1930s expanded PUC authority from an advisory, sunshine role to serious oversight.
In his article, "Why Taxes Don't Distort Emissions Trading" (Dec. 1, 1994, p. 37), Michael Thomas suggests that utilities should flow through the proceeds of emission allowance sales to ratepayers in the year of sale. His idea is that utilities can eliminate any net effect on current income taxes by matching the increased revenue (emissions sales proceeds) against a revenue decrease (lower rates charged to customers). Slam dunk. End of story. Unfortunately, it's not so simple.
Annual Annual EPS
Close Close Percent 52-Wk 52-Wk Div Div Book P/E Last
Company Region 09/30/94 12/30/94 Change High Low Rate Yield Value Ratio 12 Mos. Electric Utilities AEP Company Inc. Midwest 31.38 32.88 4.78 37.38 27.25 2.40 7.30 22.68 11 2.94
Unicom Corp. Midwest 22.25 24.25 8.99 28.75 20.63 1.60 6.60 24.39 - -0.31
Union Electric Co.
The Federal Energy Regulatory Commission (FERC) will allow Aquila Power Corp., a power marketing subsidiary of UtiliCorp United Inc., to sell electricity at market-based rates, and has approved open-access transmission tariffs for UtiliCorp (Docket Nos. ER95-203-000 and ER95-216-000). Commissioner William L.
Southern California Edison (SCE) has asked the Federal Energy Regulatory Commission (FERC) to halt the state's Biennial Resource Plan Update energy auction (BRPU). SCE charges that the California Public Utilities Commission (CPUC) violated the Public Utility Regulatory Policies Act (PURPA) and FERC regulations by reinstating the auction late last year.
SCE believes that the auction, which requires California utilities to enter purchased-power contracts, could increase its potential stranded costs by up to $4 billion (in nominal dollars).
The seven regional Bell operating companies have formed a coalition (em the Alliance for Competitive Communications (em to spearhead their efforts to reform the nation's telecommunications laws. The group's central goal is to eliminate barriers to competition among local telephone, long-distance, and cable television companies by:
s Encouraging competition in all markets
s Protecting universal service
s Opening markets to all competitors at once
s Ensuring that all competitors in each market are regulated similarly.