The New York Mercantile Exchange (NYMEX) and EnerSoft Corp., a New York State Electric & Gas subsidiary, have launched Channel 4, the only electronic bulletin board (EBB) that allows companies to trade natural gas and pipeline capacity in the United States and Canada via a single system. Channel 4 is also the only system connected to over 40 pipelines, which it sweeps for information.
The Ohio Public Utilities Commission (PUC) has approved a settlement agreement in a case involving a safety code investigation of Columbia Gas of Ohio, Inc., a natural gas local distribution company. The PUC had directed its staff to investigate whether Columbia Gas had violated safety code provisions governing maximum allowable operating pressures for pipeline segments.
investor-owned electrics at $50 to $300 billion, depending on market-price assumptions. The most likely scenario would produce about $135 billion in stranded costs, compared to present total industry equity of about $165 billion and total assets of $570 billion.
The Connecticut Department of Public Utility Control (DPUC) has adopted new cost-of-service guidelines allowing natural gas local distribution companies (LDCs) to develop unbundled rate structures, including cost-based firm transportation rates. The DPUC also issued suggestions for refining existing supply and demand forecasting methods. According to the DPUC, current cost-of-service studies did not adequately address interclass subsidies at existing rate levels.
For almost a decade now, the Federal Energy Regulatory Commission (FERC) has pursued the goal of promoting competition in bulk-power markets, focusing on access to transmission as its primary tool to achieve that end. This trend first emerged in the 1987 PacifiCorp merger case. It gained momentum with the strong message sent by the Congress in the Energy Policy Act of 1992 (EPAct).
In a preliminary ruling, the Florida Public Service Commission (PSC) has proposed several changes to its rules for setting a generic rate of return on common equity (ROE) for water utilities. The proposed leverage formula produces a suggested ROE range of 10.18 to 11.88 percent, based on an equity ratio of 40 percent. The change represents an increase of 55 basis points over the midpoint indicated by the existing formula. According to the PSC, the update incorporates changes in underlying market conditions, including bond yields and required rates of return.
Standard & Poor's (S&P) CreditWeek Municipal notes that municipal electric utilities are resisting the investor-owned utility (IOU) merger trend in favor of competing through internal cost controls and sharing of services. The main reason, according to S&P directors Marla Fox and William Cox, is that municipals are political entities governed by city councils or appointed boards, and mergers would result in less authority for those decisionmakers.
Citing a need to prepare for the emerging competitive marketplace, Central Illinois Light Co. has volunteered to experiment with direct access for all of its customers. The utility has asked the Illinois Commerce Commission to consider two separate pilot programs that will allow customers to purchase some or all of their power requirements from other suppliers.
When an electric utility invests in a resource to serve its customers, it does so with the belief that the asset underlying the investment can be pledged as collateral to secure debt capital. But what happens if the asset is not owned by the company and, therefore, provides no collateral? The following situations illustrate:
Situation A
Electric utility "A" chooses to build a small generating plant to meet the future needs of its growing customer base.
One of the iron rules of competition and open markets is that there are winners and losers. Winners tend to win very big; losers tend to lose everything and disappear, through absorption or insolvency. As deregulation takes hold, high-cost producers and less adroit managers may find themselves steamrollered by emerging strongmen and entrepreneurial upstarts. These rivals may usurp segments of their business by bidding the job cheaper and still making money, leaving a rising tide of shareholder suits in their wake.