IPP

FERC's Plan for Electric Competition

WHY IS ELECTRICITY COMPETITION NOT WORKING? The principal reason is the failure of Order 888 to accommodate the economic and technological constraints of wholesale power markets.

Soon after Congress passed the Energy Policy Act of 1992, to give authority to the Federal Energy Regulatory Commission to compel electric utilities under its jurisdiction to wheel power for others, the FERC correctly recognized that piecemeal wheeling orders wouldn't work well without a tariff. A tariff would make the service quickly available to the user without the need for time-consuming negotiation.

The Electric Competition Debate in...New York

HAS DISAGREEMENT BETWEEN STATE HOUSE AND COMmission stalled electric industry restructuring efforts in New York?

Sheldon Silver, speaker of the New York State Assembly, insists the Legislature is busy working on comprehensive restructuring legislation for the state. He has expressed dismay at efforts of the New York Public Service Commission, which is restructuring the industry utility by utility.

Silver believes legislation offers the best chance to introduce competition quickly and efficiently, rather than through multiple, individual restructuring plans.

News Digest

Courts

NITROGEN-OXIDE EMISSION LIMITS. Denying an appeal by electric utilities and industry groups against rules proposed by the U.S. Environmental Protection Agency for emission limits for nitrogen oxides at certain electric utility boilers, a federal appeals court has ruled that EPA properly interpreted the Clean Air Act. The act allows EPA to set NOx limits for certain electric utility boilers if it could show that more effective technology for low-NOx burners was available, the court said.

Electric Reliability Sanctions or Commerce?

EARLIER IN THIS DECADE, FERC CHAIRMAN MARTIN ALLDAY delivered his famous quote: "Everybody is somebody's native load customer."

Today, that truism has fallen under attack. It could go out the window if power marketers get their wish. One group of marketers has asked the Federal Energy Regulatory Commission to open a new rulemaking on electric system reliability. This group proposes to end the notion of transmission responding to load.

News Digest

Federal Agencies

ELECTRIC RETAIL PRICES. The Energy Information Administration has released a new report finding that the average retail price of electricity has declined for the third year in a row and remained stable for the first nine months of 1997. According to Electric Sales and Revenue 1996, average residential electric prices declined slightly in 1996, the first drop for that consumer class since the EIA began collecting data in 1984.

Perspective

THE PEOPLE HAVE spoken. They want choice in power supply in California and in other states. But people are also "load," at least in utility parlance. And some load in some areas can prove awfully difficult to serve. They're called "load pockets."

The Challenge

A load pocket is formed when a deficiency in transmission capacity to a market area cannot be priced away sufficiently to clear the market during peak-load periods. Consequently, the market area must rely on "must-run," local generation units during part of or all of the year.

News Digest

POWER PLANT SALE. Central Maine Power Co. has agreed to

sell its hydroelectric, fossil and biomass power plants totaling 1,185-MW of generating capacity to FPL Group, the holding company of Florida Power and Light. The sale price of $846 million exceeds book value and could permit up to a 10-percent rate cut for customers by the end of the year.

OHIO/TEXAS DEAL. Ohio-based American Electric Power

Co. and Texas-based Central and South West Corp. on Dec.

Advertising & Branding: Are Utilities Getting It Right?

IN THE EARLY 1970s, WHEN THE "ENERGY CRISIS" DAWNED, New York told electric utilities to stop advertising to promote electric use. State judges deemed such promotion as lacking in "any beneficial content," or even "detrimental to society." It took an appeal to the U.S. Supreme Court for utilities to win the right to tout their product.

Today's questions target the bottom line: Can advertising boost sales for energy suppliers? If so, what does it take?

Headlines

PITTSBURGH CHALLENGES MERGER; ALLEGES COLLUSION

The city of Pittsburgh has filed an antitrust lawsuit against Allegheny Power Systems Inc., and Duquesne Light Co., to stop the merger proposed by the two companies.

In its Sept. 29 court filing, Pittsburgh claimed the two utilities acted jointly to restrain trade. The city said the companies did this by agreeing to maintain higher rates for electric retail service at two industrial sites targeted for redevelopment zones pending their merger.

Moody's Predicts Greater Polarity in IPP Ratings

Moody's Investors Service examines key credit considerations in the evolving independent power production industry in a new report. The report predicts greater polarity in ratings of such companies.

The Haves and the Have-Nots: Access to Capital, Diversified Portfolios says the IPP industry will become dominated by "first-tier" companies that exhibit financial flexibility needed to survive in an increasingly uncertain environment. Such companies will possess diversified assets and ability to generate cash.