DSM

PUCs at 2000 - Question OneState Commissioners

Question: Will your commission still be around in the year 2000? If so, what will it look like? Are you restructuring your commission with the same fervor you devote to electricity, gas, and telecommunications?Response by Nancy McCaffree, Chair, Montana Public Service Commission:

As a regulator I have had the opportunity to listen to economists, energy planners, and other professional soothsayers. I have come to the conclusion that the only certainty pertaining to future forecasts is that they will be wrong 100 percent of the time.

LDC Must Study Externalities

The Massachusetts Department of Public Utilities (DPU) has accepted a settlement agreement calling for approval of gas-forecasting, supply-planning and demand-side management (DSM) efforts by Berkshire Gas Co., a natural gas local distribution company (LDC). Nevertheless, the DPU directed the LDC to undertake a good-faith effort to quantify avoidable environmental costs

and to incorporate those findings in rescreening its DSM options.

Marketing & Competing

Current utility marketing efforts focus almost entirely on large customers or "key" accounts, responding reactively to competitive threats such as self-generation, municipalization, and even geographic relocation. These threats have become all too real for many utilities. Niagara Mohawk Power Corp. has lost 15 percent of its large industrial load in the last 15 years. The recently negotiated long-term power contracts between Detroit Edison and the Big Three automakers are a conscious response to the looming threat of retail wheeling.

Perspective

Electric industry restructuring is progressing at a rapid pace. Across the country, states are moving ahead to encourage retail competition. Two states have allowed retail wheeling experiments (Michigan and New Hampshire), utilities are proposing them, and over 20 states are studying the issue. Back in Washington, Congress is examining legislation to amend the Public Utility Holding Company Act (PUHCA).

Know Thy Customer

Companies in competitive industries routinely collect information about their customers through a variety of sources (em including surveys, national census, and government and private sources. Such customer information and its applications are jealously guarded secrets, rarely shared with others in the industry. Customer information is not limited to expenditure on a company's products or services, but usually includes a customer profile.

Perspective

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.

Mortgaging Your Conservation: A Way Out for Stranded Investment?Andrea L. Kelly and Donald E. Gaines

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.

Montana and Iowa Reject EPAct Section 115

The Montana Public Service Commission (PSC) has decided not to adopt federal standards for natural gas integrated resource planning (IRP) and demand-side management (DSM) contained in section 115 of the Energy Policy Act of 1992 (EPAct), concluding that current information did not support establishing formal standards in those areas. The PSC explained that the expected costs of future commission involvement in the matter outweigh the benefits that might reasonably be expected at this time. Re Section 115, Energy Policy Act of 1992, Order No. 5861, Docket No. 94.9.42, Aug.

Utah Approves DSM Lost Revenue Recovery Rejects Statistical Recoupling

The Utah Public Service Commission has approved an agreement to continue allowing PacifiCorp to recover lost revenues associated with

demand-side management programs. A study of the functioning of interim policies on DSM cost-recovery methods indicated that the lost revenue recovery encouraged the utility to meet its conservation resource goals, according to the PSC.