News Digest

 

A former state regulator notes serious problems in Northeast power markets, and offers remedies.

Mergers & Acquisitions

NSP + New Century. The Federal Energy Regulatory Commission OK'd the merger of Northern States Power Co. (NSP) and New Century Energies Inc. (NCE), to form Xcel Energy Inc., on condition that the new company would join the Midwest Independent System Operator. FERC Docket No. EC99-101- 000, Jan. 12, 2000, 90 FERC ¶61,020.

* Rate Pancaking. The FERC found no problem with transmission rate pancaking with the MISO condition, even though NCE subsidiary Southwestern Public Service Co. (SPS) belongs to the rival Southwest Power Pool.

How does each region manage congestion, allocate losses and dispatch resources? Which players gain the most from each approach?

The United States now has six independent system operators, five approved by the Federal Energy Regulatory Commission and one approved by the Public Utility Commission of Texas. These ISOs present an astonishing array of similar and conflicting rules and philosophies by which transmission services are defined and priced.

This article aims to explain some of the key similarities and differences among the ISOs' transmission pricing schemes.

Power plants can bid on more than one product. That's why most spark-spread studies miss the mark.

Forward energy prices can make it look easy to place a value on a power plant. Yet something is missing. Plants can sell more than one product. One price may be up while another is down. As Einstein said, a theory should be as simple as possible, but no simpler.

That is why it is worth reexamining the methods commonly used to calculate forward price curves and estimate the expected revenues and profits of generating assets.

State PUCs

Gas Retail Rate Design. In a move toward equalizing rates of return between customer classes, the Oregon PUC authorized Northwest Natural Gas Co. to increase base rates by nearly $246,000, at the same time boosting residential rates by 1.3 percent but lowering rates for large commercial and industrial users. It set return on equity at 10.25 percent, finding the rate "consistent with the downward trend of ROEs authorized by other regulatory commissions." Order No. 99-697, Nov. 12, 1999 (Ore.P.U.C.).

Electric Restructuring.