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Law & Lawyers

Moody's Looks at Plant Divestiture

Moody's Investors Service has released a report that finds the most significant long-term implication of Order 888 for investors is for potential divestiture of transmission assets by investor-owned utilities.

The Moody's study, FERC Order 888 and Wholesale Competition: Catalyst for a New Market Model, also finds that divestiture by a vertically integrated utility may leave bondholders secured by a lien on relatively risky generating assets of often questionable market value, as opposed to the presently more diverse and balanced asset portfolio.

Byline: 
Lori A. Burkhart
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Mailbag

Authors lost their case. The bright line is preserved.

Unfortunately, PUBLIC UTILITIES FORTNIGHTLY did not caution its readers that a recent article ("Gas Pipelines and the Hinshaw Amendment: Conflicts Loom as the 'Bright Line' Fades Between Federal and State Jurisdiction," April 1, 1997, p. 36) is actually a thinly disguised brief for claims that a series of tribunals has rejected, including the U.S. Supreme Court. A warning from the editors would have saved valuable time for readers searching for more substantive coverage of the utility industry.

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In Brief...

Sound bites from state and federal regulators.

IntraLATA Toll Calling. North Carolina says newly certified competitive local exchange telephone carriers must apply for separate authority to provide intraLATA toll services, even though incumbent local carriers need not do so. Docket No. P-100, SUB 133, March 31, 1997 (N.C.U.C.).

Dialing Parity. Oregon PUC adopts policies on telephone dialing parity to allow all telephone users who choose alternate carriers to make calls without dialing extra numbers. Order No. 97-107, March 18, 1997 (Ore.P.U.C.).

Payphone Subsidies.

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Trends

In the electric industry restructuring debate lurks an important issue: If utilities recover some level of stranded costs, how do you design a cost recovery mechanism that minimizes stranded costs? This issue is important because, among other things, it will affect total customer savings.

One way to encourage utilities to mitigate stranded costs is to allow recovery of only a portion of costs. For instance, the California stranded cost recovery mechanism provides utilities with a "fair opportunity" to recover all of their stranded costs.

Byline: 
Christopher Seiple
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Electric Transmission: Jury Still Out on Flow-Based Pricing

Dominion Resources touts its "impacted" method, but opponents call it a "stalking horse" (em a scheme to avoid full review at FERC.

Is the Federal Energy Regulatory Commission prepared to accept true marginal-cost pricing for electric transmission?

With all the criticism leveled at the traditional "contract path," one would think that the FERC would consider a new approach to transmission pricing.

In fact, last year in its final Order No.

Byline: 
Bruce W. Radford
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Sacremento to Allow Customer Choice

The board of directors of the Sacramento Municipal Utility District has approved the introduction of competition in its service territory. SMUD is opening up competition for 100 megawatts of power (em about 5 percent of its total load (em in its new "Direct Access Phase-In Program."

Starting in June, customers may contract with a new energy supplier. Customers could receive power from the new provider in July.

Byline: 
Lori A. Burkhart
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States Set Rates for LEC Interconnection Services

Signaling victory over one of the more complex issues in the move to competition in the local telephone market, regulators in Connecticut and New York have adopted rate plans for unbundled interconnection services offered by incumbent local exchange carriers.

Both states also recently approved the wholesale discount rate that the LECs must apply to existing services when offering them for resale by competitive companies. See Re AT&T Communications of New York, Inc., 173 PUR4th 274 (N.Y.P.S.C. 1996); Re So. New England Tel. Co., Docket No. 95-06-17, March 25, 1997 (Conn.D.P.U.C.).

Byline: 
Phillip S. Cross
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Study Predicts Changes in Northeast

The Reed Consulting Group has released a study, which predicts that in 10 years, no more than six major companies will dominate the Northeast power market in each of the generation, wires and energy services industries.

The study also said the transition to competition primarily would affect generation and energy marketing.

On the Brink of Competition: RCG's Guide to the Northeast Power Market finds that New England and New York are setting the pace for the nation on power and fuel markets convergence.

Byline: 
Lori A. Burkhart
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Idaho Approves Direct Access, Electric Pricing Plot

The Idaho Pubic Utilities Commission has approved two new electric market experiments to test a market-based pricing tariff proposed by one electric utility and a direct-access pilot program proposed by another.

Market-based pricing. It authorized Idaho Power Co. to offer industrial customers, on an experimental basis, the option of purchasing power under a market-based rate schedule. Customers who contract for 5 to 10 megawatts of firm demand at one delivery point qualify for the pilot tariff program.

Byline: 
Phillip S. Cross
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Amtrak Saves with Enron Contract

Amtrak has entered an agreement with power marketer Enron Capital & Trade Resources to purchase electricity to power nearly 600 Amtrak and commuter trains each day on the Northeast Corridor between New York and Washington, D.C., and 100 trains a day on the Keystone Line between Philadelphia and Harrisburg, Pa.

Amtrak spends about $40 million a year for electric traction energy, which is purchased from several suppliers. The wholesale contract will reduce those costs nearly one-half.

Byline: 
Lori A. Burkhart
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