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Law & Lawyers

Winners' Curse: Why Spectrum Bidders Overpaid

(And why power plant buyers may follow suit.)

"WINNERS' CURSE" IS IMPORTANT TO THE UTILITY ASSET AUCTIONS. Winners' Curse is the tendency for the "rookies" and the wide-eyed visionaries to overbid in auctions with uncertain valuations.

The spectrum auctions at the Federal Communications Commission reveal the Winners' Curse even in the more "successful" rounds, despite the agency's elaborate precautions.

FCC's 14 spectrum auctions booked almost $23 billion in license fees (em almost $10 billion in broadband personal communications services (PCS).

Byline: 
Stephen Maloney
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Spectrum Auctions at the FCC: A Lesson for Utilities?

When the fanfare dies down, winners face the same challenge as with any new start-up but may enjoy more options than incumbent licensees.

The Federal Communications Commission's auctions of spectrum should concern two types of energy utilities: those who participate in the auctions and those who don't.

Initially, these auctions were viewed as a spectacular new regulatory tool (em able to raise billions of dollars for the public, without troubling the overburdened taxpayer. As of late, however, a dark side has emerged. Bidders have cried fraud.

Byline: 
Shirley S. Fujimoto, and Christine M. Gill
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Gas Restructuring: Can Distributors Repeat the Success of Pipelines?

A talk with two LDCs. First, PSE&G appears content to cede sales to marketers, Second, NW Natural intends not to give in just yet.

This much is clear: Energy utilities are headed for an unbundled future.

As states from both sides of the country implement residential and commercial natural gas unbundling, require residential choice pilot programs and grapple with electric industry restructuring, competition shows no signs of slowing. To boot, some members of Congress seem eager to give competition a national push.

Byline: 
S. Lawrence Paulson
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Idaho Reviews Surcharge for Conversation Research

The Idaho Public Utilities Commission has rejected a request by Idaho Power Co. to include a "public purpose charge" in ratepayer bills to fund its participation in the Northwest Energy Efficiency Alliance.

The utility said that the goal of the new organization is to transform existing energy markets to permit improvements in energy use efficiency without the need for long-term utility incentives.

The commission permitted the utility to capitalize and defer the costs of its investment in the organization until additional information is available.

Byline: 
Phillip S. Cross
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Electric Utility Must Offer Stand-by Service at Market Rates

The Missouri Public Service Commission has directed Kansas City Power & Light Co. to offer stand-by electric services to self-generation customers at market-based prices.

The rate design approved by the commission allows the utility to recover stranded costs that might otherwise be shifted to customers who continue to take bundled electric service on the utility's regulated distribution system.

The PSC approved a plan proposed by its staff that would require the utility to employ "real-time pricing" for the energy component.

Byline: 
Phillip S. Cross
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Electric Pilot Uses Tariff Rate, Energy Credit

The New Jersey Board of Public Utilities has approved a pilot program for Jersey Central Power and Light Co. that will allow some of the utility's electric customers to choose a private energy supplier and then compare bills with and without retail competition.

JCP&L, an electric utility doing business as GPU Energy, serves more than 11,900 mostly residential customers in Monroe, N.J., the targeted town.

Byline: 
Phillip S. Cross
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Gas Producers Must Refund Ad Valorem Tax

The Federal Energy Regulatory Commission has ordered natural gas producers in Kansas to refund to customers approximately $500 million for erroneously adding the state's ad valorem tax onto interstate rates.

In its Sept. 10 ruling, the FERC said such taxes are not eligible for rate recovery under the Natural Gas Policy Act of 1978 and, following court directive, ordered the customer refund. (See, Docket Nos. rp97-369-000 et al.).

The refund covers gas produced from October 1983, when the petition challenging the add-on tax originally was filed at the FERC, until June 1988.

Byline: 
Lori A. Burkhart
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