Let's hope that by now we all prefer market solutions to government mandates. Markets are generally more efficient and equitable. Recent experiences with deregulation for airlines and telecommunications have vindicated Adam Smith's notion that the "invisible hand" can prove superior to regulation.
Unfortunately, this knowledge offers little comfort today to natural gas pipelines (em even to those companies not saddled with a surplus of transportation capacity.
Nevada Power Co. (NP) has announced a tentative agreement for the largest rate reduction in its history, reflecting lower purchased power prices, lower overall fuel costs, and improvements in efficiency.
The California Public Utilities Commission has approved an interim competitive transition charge (CTC) for Pacific Gas & Electric Co. (PGE), effective until the PUC adopts a permanent, industry-wide CTC.
PG&E would collect the charge (39 percent of the current bundled rate) from any customer existing its system before January 1, 1998, the start of electric competition in California.
PG&E spokesman Tony Ledwell said less than a dozen customers had indicated they would attempt to leave the PG&E system early.
The Board of Trustees of the Western Systems Coordinating Council (WSCC) has endorsed a new reliability compact that would require mandatory compliance and enforcement of established electric system reliability protocols in the Western U.S.
WSCC said it is taking a leadership role in overhauling the existing "voluntary" reliability management process and replacing it with a new framework to strengthen the roles, responsibilities, and authorities of WSCC and the North American Electric Reliability Council (NERC).
Jay P. Lukens, formerly a principal at Energy Market Economics, Inc., was hired by The Economic Resource Group, Inc., as managing director and principal of the company's new Houston office.
Edison Source tapped Aram G. Sogomonian, a former executive at Enron Capital and Trade Resources as its new corporate risk management v.p. Sogomonian was Enron's director of risk analytics and asset price, and also has worked at Unocal.
Larry Grossman, a senior v.p. at Cassidy & Associates, was retained by the Council on Superconductivity for American Competitiveness as executive director.
Each assumes a vertical breakup, but watch out for securitization.
It can prove difficult to detect any overt difference of opinion among financial credit rating agencies. That appears to be the case in today's electric utility industry, where Moody's, Duff & Phelps, and Standard & Poor's each predicts that a breakup of the vertically integrated utility is now virtually inevitable. The result, they say, will leave us with an industry made up of disaggregated high-risk power generators, and lower-risk companies engaged in transmission, distribution, and other related services.
Models can overcome a key oversight (em
that both supply and demand affect competition.
This past December, the Federal Energy Regulatory Commission (FERC) issued a policy statement describing important changes in how it will evaluate proposed mergers under the Federal Power Act's public interest standard. These changes should lead to significant improvements (em not only in the evaluation of mergers, but also for other matters that affect market power, %n1%n including industry restructuring and market-based pricing.
Applicants can only hope that a prompt review won't be even more difficult
By a unanimous vote, on December 18, 1996, the Federal Energy Regulatory Commission (FERC) issued Order No. 592, stating how it intends to evaluate utility mergers. The anticipation has ended, yet those hoping for a new approach and a quicker review are bound to be disappointed.
Order 592 is a "Policy Statement." As such, it only announces intentions; it imposes no new obligations and is not subject to judicial review until implemented in a specific case.
In two recent actions concerning natural gas marketers and brokers, the Pennsylvania Public Utility Commission (PUC) has proposed new policy to define its authority over marketing by the state's local distribution companies (LDCs) and their affiliates, plus a new rule requiring LDCs to set tariffed guidelines to ensure that marketers and brokers possess the financial and technical fitness necessary "to meet their contractual obligations" in transporting gas through LDC systems.
It stressed that it would not permit unreasonable discrimination in retail offerings (em whether by the LDC
While approving the transfer of certain water utility assets and certificates between two utility companies, the Florida Public Service Commission (PSC) has decided against applying a negative acquisition adjustment to rate base in setting rates for the acquiring utility, even though the buyer paid "substantially less" than original cost for the facilities ($545,000 versus $2.845 million).
The PSC ruled that without extraordinary circumstances, its policy requires that a purchase of utility assets at a premium or discount should not affect the rate base calculation.