Public Service Co. of Colorado

News Digest

Federal Agencies

NOX EMISSIONS. Generating heavy criticism from industry, on September 24 the Environmental Protection Agency released its long-awaited final rules on nitrogen oxide emissions, outlining a plan to reduce NOx by 28 percent by year 2007 in some 22 states and the District of Columbia, with state implementation plans due by September 1999 and controls in place by 2003, to be carried out through a "cap and trade" program to buy and sell NOx emissions credits.

Assuring Compliance With Air Emissions Limits

THE U.S. ENVIRONMENTAL PROTECTION AGENCY HAD A novel idea: For power plants and sources relying on devices to control air emissions, rather than attempt to monitor the actual physical emissions to determine compliance with federal law, it simply would require inspections and tests of the performance of the control device. %n1%n

This strategy was formalized in the EPA's compliance assurance monitoring (CAM) rule signed Oct. 17, 1997. The EPA's theory is that if the control device is working properly, it is likely pollutant emissions fall within the required limits.

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.

Competitive Efficiency: A Ranking of U.S. Electric Utilities

Do mergers and "critical mass" really make a difference? The answer, it seems, is yes.

To become more competitive, U.S. electric utilities have embarked on a quest in recent years to improve operational efficiency and factor productivity. The question is: Are utilities making progress? And, which companies have gained a competitive edge? Which have not?

Industry analysts have long argued that given the structure of the markets they serve and their cost-based, rate-setting procedures, electric utilities tend toward monopolistic behavior.

FERC Approves Merger

The Federal Energy Regulatory Commission has approved the merger of Public Service Co. of Colorado and Southwestern Public Service Co. to create "New Century Energies" (Docket Nos. EC96-2-000 and EC96-2-001).

In a separate order, the FERC has approved the open access transmission tariff for Southwestern Public Service, Public Service Co. of Colorado, and its subsidiary, Cheyenne Light, Fuel and Power Co. (Docket No. ER96-2572-000).

Public Service Co. of Colorado and Southwestern Public Service Co. had filed an unopposed settlement agreement.

Frontlines

If Jane Austen were writing this column, she would begin something like this: "It is a truth university acknowledged, that a natural gas distributor in possession of a good franchise must be in want of an electric utility to merge with."

That's the rule of electric/gas convergence. But as an editor, my instinct when I uncover such a "rule" tell me to look for a reason why it ain't so. That's why I got such a kick from a recent conversation with Sheldon Silver, the speaker of the New York State Assembly.

In Brief...

Sound bites from state and federal regulators. Gas Load Building. Finding no protest from electric utilities, North Carolina waives requirements for preliminary cost-benefit analysis and approves incentive programs for Piedmont Natural Gas Co. Inc., designed to boots gas load by installing commercial gas cooking equipment at community colleges for use in culinary degree programs. Commission tells company to conduct a cost-effectiveness analysis as soon as it can gather the necessary data from actual operating experience. Docket No. G-9, Sub 377, Jan. 31, 1997 (N.C.U.C.).

Financial News

Annual Annual EPS

Close Close Percent 52-Wk 52-Wk Div Div Book P/E Last

Company Region 06/28/96 09/30/96 Change High Low Rate Yield Value Ratio 12 Mos.Electric Utilities

AEP Company Inc. Midwest 42.63 40.63 -4.69 44.75 35.13 2.40 5.91 22.68 13 3.10

Unicom Corp.

Joules

The U.S. Department of Energy (DOE), in a report analyzing the July power outage in

14 Western states, notes that New England is "challenged" by the shutdown of 3,000 Mw of nuclear capacity in Connecticut. The mid-Atlantic will be likewise challenged over the coming years by delay in the construction of a 765,000-volt transmission line between West Virginia and Virginia.

UtiliCorp United amended an electric-supply contract with Public Service Co. of Colorado to reduce electric costs for 78,000 electric customers by as much as $1 million a year.

Texas Merger Nears Settlement

Southwestern Public Service Co. (SPS) and Public Service Co. of Colorado (PSCC) have promised to credit Texas ratepayers a minimum of $3 million in annual bill savings (em one part of the settlement proposed on July 8 in their merger case before the Texas Public Utilities Commission (PUC). According to SPS, the proposed settlement represents an agreement reached between it, the staff of the Texas PUC, and five intervenors in the merger case.

The PUC's administrative law judge has suspended the proceeding so the various parties can finalize details.