Traditional utility regulation has been unable to prevent the electric rates of some utilities from rising far above those of neighboring companies. Two factors are responsible for this failure. First, regulators lack the means to keep seemingly reasonable but unnecessary costs from creeping into rates. Second, ratemaking considers a utility's costs in isolation and does not use peer benchmarks to true up rates.
Political pressure helped limit rate increases for nuclear plants during the 1980s.
The Southwest Regional Transmission Association (SWRTA) has filed amended bylaws with the Federal Energy Regulatory Commission (FERC), incorporating two FERC conditions: 1) comparable transmission service, and 2) a single regional transmission plan. To achieve comparability, each transmitting member subject to FERC jurisdiction under sections 205 and 206 of the Federal Power Act will file comparable transmission service tariffs with the FERC.
The United States Enrichment Corp. (USEC), the world's largest producer of uranium enrichment services, has submitted its privatization plan to President Clinton and Congress. The plan, mandated by the Energy Policy Act of 1992, suggests that USEC be sold to the private sector early in 1996 under a dual approach that simultaneously pursues a public offering of common stock and a negotiated merger or acquisition by a third party.
The Massachusetts Department of Public Utilities (DPU) has granted preliminary approval to a water utility's proposal to "project finance" the cost of a new treatment facility required to comply with federal and state laws. The utility, Massachusetts-American Water Co., had proposed forming a special purpose corporation solely to finance the plant. The new corporation would lease the facility to the utility, using the payments to repay tax-exempt bonds issued under the financing plan.
The New York Power Authority (NYPA) favors restructuring opportunities consistent with a statewide,
single-operator transmission system. Their proposed model, submitted to the New York Public Service Commission (PSC) as part of the "Competitive Opportunities" proceeding, envisions an independent system operator that would own and operate all transmission facilities in the state. Alternatively, NYPA would agree to a consortium in which owners cede their facilities to a single operating entity via a contractual relationship.
By a 2-1 vote, the Texas Public Utilities Commission (PUC) has placed a condition on approval of Houston Lighting and Power's (HLP) experimental tariff for special contract pricing (Rate Schedule SCP) with industrial customers whose electric power needs are or can be served by alternative sources of power: The floor of the rates must be designed to recover marginal costs (Docket No. 12957). The order on rehearing affirmed an earlier PUC decision shortening the term of the contracts from the proposed 7 to 10 years to 5 to 10 years.
With this issue I've finished up my first 12 months as full-time editor of PUBLIC UTILITIES FORTNIGHTLY. During that time, I've tried to adhere to few simple rules. If I'm lucky, I'm batting four out of five:
s Trust ideas, not facts
s Welcome different views
s Don't shy from difficult subjects
s Make it easy to read
s Take a day off now and then.
Someone once said that an editor's job is twofold: "Simplify and exaggerate." That advice may sound peculiar, but one could do worse.
Last year was pivotal for nuclear power. On May 13, 1994, the board of directors of the Washington Public Power Supply System (WPPSS) voted 9-4 to terminate reactors WNP-1 and WNP-3, triggering a dismantling of the two mothballed reactors, both about 70 percent complete. For ratepayers in the Pacific Northwest, the decision offered no relief from bills for construction of the two plants (em recently estimated at about $350 million per year for the next 24 years1. In many ways, WPPSS and its troubled history is a microcosm of the U.S.
This country's 350,000 manufacturers must add cutting-edge technologies to their processes to stay competitive. Yet most are small- to medium-sized companies leery of investing in new technology without first
confirming its effect on their
products.Some utilities previously had no option but to run local technology-demonstration facilities on their own (see sidebar on p.