Federal Energy Regulatory Commission

MidAmerican Energy Gets Green Light

The Federal Energy Regulatory Commission (FERC) has approved the proposed merger of Midwest Power Systems, Inc. and Iowa-Illinois Gas and Electric Co. to form MidAmerican Energy Co. as consistent with the public interest (Docket No. EC95-4-000).

The City of Independence, MO, asked the FERC to condition the merger on MidAmerican providing some form of protection against merger-related rate increases, but the FERC found no evidence that costs would increase as a result of the merger.

Capacity Release Standards Issued

On May 31, the Gas Industry Standards Board (GISB) circulated for industry review and comment proposed electronic standards for capacity release. The proposed standards are based on the work of the Federal Energy Regulatory Commission (FERC) electronic bulletin board (EBB) working group, and include those formally adopted by the FERC in Order 563. GISB added easy implementation methods and expanded the definitions of the information requirements. It also included enhancements that the FERC EBB working group plans to file for FERC review in the near future.

FERC Wants Rolled-in Pricing for Systemwide Benefits

The Federal Energy Regulatory Commission (FERC) has issued a policy statement requiring

rolled-in pricing for new pipeline facilities where the benefits to the system are proportionate to the rate impact on existing customers (Docket No. PL94-4-000). In the past, the FERC made cost-recovery pricing decisions during the first rate case after the facilities were constructed. Now, the FERC will make its determination when the certificate is issued.

Cal. GOP Pushes for Energy Resource Diversity

Eleven of California's Republican Congressmen have thrown their weight behind Gov. Pete Wilson

(R-CA) in a letter attacking the Federal Energy Regulatory Commission's (FERC's) February 22 decision that the California Public Utility Commission's resource auction violated the Public Utility Regulatory Policies Act in failing to consider all sources in setting avoided costs. The letter opposes what it labels the FERC's attempt to overturn California's Biennial Resource Plan Update (BRPU).

SEC Calls for PUHCA Repeal

The Securities and Exchange Commission's Division of Investment Management has proposed repeal of the Public Utility Holding Company Act of 1935 (PUHCA), with consumer safeguards preserved and transferred to the Federal Energy Regulatory Commission (FERC). Safeguards would include state access to holding company books and records, federal audit authority, and oversight of affiliate transactions.

Perspective

Recently I had the opportunity to testify before the Subcommittee on Energy Production and Regulation of the U.S. Senate Energy and Natural Resources Committee on legislation that would repeal the Public Utility Regulatory Policies Act (PURPA). During the course of the hearing, Sen. Bennett Johnston (D-LA) made a comment that framed perfectly the

federal-state tensions currently affecting energy regulatory policy in America.

Sen.

Iowa PURPA Law Comes Under Firet

Midwest Power Systems Inc. (MPS) has asked the Federal Energy Regulatory Commission (FERC) to void the Iowa law requiring Iowa utilities to pay six cents per kilowatt-hour for electricity generated by qualifying facilities (QFs). MPS

argues that the Iowa price is more than twice what federal law imposes under a market-based rate. MPS and the three other investor-owned utilities (IOUs) in Iowa had asked the state legislature earlier this year to make the Iowa law conform to federal law, but the bill was not passed.

Frontlines

Last Spring I heard superintendent William "Billy" Ray tell how the folks down home at his Glasgow, KY, municipal utility took a flier on the information superhighway. They gambled and won by constructing a new utility-owned cable television system to offer competitive TV service to their municipal electric customers.

Whither PUHCA: Repeal or Re-Deal?

On a purely intellectual level, it is difficult to justify the Public Utility Holding Company Act of 1935 (PUHCA). Sixty years after passage, PUHCA has become an anachronism (em a fact well articulated in comments filed in response to the Concept Release on the modernization of the Act issued last November by the Securities and Exchange Commission (SEC).1 More recently, the SEC's Division of Investment Management actually recommended a conditional repeal (see sidebar).

The ABCs of PBR

In the alphabet soup of regulatory acronyms, performance-based ratemaking (PBR) may help shape events well into the next century. At present, PBR is being implemented, or considered by, public utility commissions (PUCs) in over 20 states. By 2000, PBR is likely to reach most of the 50 states as well as the Federal Energy Regulatory Commission. The pressures of a global economy have raised the stakes.