Commission

The California Public Utilities Commission (CPUC) has approved a request by Pacific Gas and Electric Co. (PG&E), an electric utility, to extend balancing account treatment to payments it makes for settlements or judgments rendered in litigation of purchased-power contract disputes with qualifying cogeneration facilities (QFs).

[An earlier CPUC order authorized the utility to record payments to QFs to terminate agreements and to settle contract disputes in its adjustment-clause balancing account.

Two more states at opposite ends of the country have acted substantively on electric utility restructuring (em one moving full speed ahead toward unbundling of wholesale "merchant" services, the other seeking to slow down the transition to retail wheeling.

The Nevada Public Service Commission (PSC) has released draft sections of a report on electric industry restructuring that was scheduled to go to the state legislature in June.

The New York Public Service Commission (PSC) has issued a framework of goals and strategies for restructuring the electric industry in the state. The PSC directs all electric utilities in the state that have not yet initiated restructuring to file plans that will open the retail generation and energy-service markets to competition for all customer classes.

Market Structure (em PoolCo Model. The PSC adopted a "flexible retail PoolCo" model to ensure an orderly transition to retail competition.

Despite two years of debate, little progress has been made toward a solution to the issue of stranded costs. And since the two sides have almost no common ground, any accommodation seems unlikely. Utilities that seek stranded-cost recovery appear to have the upper hand at present, but the stiffest resistance still lies ahead. The Federal Energy Regulatory Commission's Order 888 clearly favors utilities, but customer reaction signals a shift to another venue.

Madison Gas and Electric Co. (MGE) has asked the Federal Energy Regulatory Commission (FERC) not to approve the proposed merger of Wisconsin Energy Corp. (WE) and Northern States Power Co. (NSP) to form "Primergy." MGE claims that the merger would not only subject Wisconsin's electric consumers to higher prices, but severely impair competition.

According to Mark Williamson, MGE senior vice president of energy services, the Primergy merger would create market concentration in generation and transmission, resulting in market power abuses and anticompetitive conduct.

Two utility merger lawyers at LeBouef, Lamb, Green & MacRae predict that the Federal Energy Regulatory Commission (FERC) will continue to receive many merger applications, though some will differ from the classic merger between neighboring utilities. Douglas W. Hawes and Samuel Behrends IV have filed comments in the FERC's merger rulemaking proceeding, recommending that the FERC implement "fast track" proceedings for the next generation of mergers.

On May 13, Environmental Protection Agency (EPA) Administrator Carol M. Browner referred the Federal Energy Regulatory Commission's (FERC's) open-access rule, Order 888, to the Council on Environmental Quality (CEQ). In effect, Browner has asked the Clinton Administration to intervene in the restructuring process.

Browner feels that under certain circumstances the open-access rule could lead to future increases in air pollution. She believes these impacts can be minimized through a combination of actions by EPA and states under the Clean Air Act (CAA).

Rep. Dan Schaefer (R-CO), closed his final hearing on electric industry restructuring with what sounded like a promise to push utilities down the bumpy path of retail wheeling.

"My vision for the future is one where all consumers have the ability to pick and choose among numerous competitive suppliers of electricity," Schaefer said. "It is one where all consumers have the benefit of lower rates, better services, and new innovations brought on by competition . . .

Penn. Examines

Utility Accountability

for Contractors

Pennsylvania State Senator Albert V. "Bud" Belan (D-West Mifflin) has disagreed with the findings of an internal investigative report by former state Attorney General Walter Cohen that exonerated Peoples Natural Gas Co. (PNG) from any responsibility for the alleged attack and rape of a utility customer by a private contractor hired to read gas meters.

$8.5-million refund for customers of Orange & Rockland Utilities, Inc. (O&R) in light of improprieties committed by some of the utility's former senior executives (Case 96039/95E0491). Since the investigation began, O&R has terminated or retired eight of 11 senior managers and replaced its external auditing firm.