PURPA

The Federal Energy Regulatory Commission (FERC) has ruled that an Illinois statute did not require rates above avoided cost for wholesale sales by qualifying facilities (QFs), and so did not violate the Public Utility Regulatory Policies Act (PURPA) (Docket No. EL95-27-000).

The statute at issue requires a utility to buy power from qualifying solid-waste energy facilities at the utility's retail rate. But the statute includes an offsetting monthly tax credit, which prevents a utility from paying more than its avoided costs.

NUGs Take the Cake

I take great exception to the presumption of Messrs. Costello, Burns, and Hegazy ("How State Regulators Should Handle Retail Wheeling," Feb. 15, 1995) that retail wheeling's "day will come." This is the oft repeated but never proven siren's song of Elcon's John Anderson and the other industrial/ cogeneration groups. The authors write: "For retail wheeling to become politically palatable, legislatures and PUCs must address the question of how to minimize the negative effects on core customers in the short term." Why?

California's 1993 qualifying facility (QF) auction dramatically illustrates problems that can be encountered in structuring auctions for electric utility solicitations of supply-side resources from qualifying cogeneration and small power production facilities.

In the 1993 California QF auction, three California utilities were to select QFs that would be awarded long-term purchased-power contr

The Ninth permits everything that is not prohibited. The Tenth prohibits everything not otherwise permitted. The one governs the People; the other governs the Government. That's all there is. Now imagine standing on both feet behind a podium, in front of a luncheon crowd of about 100 think-tank types, and holding an audience spellbound for over an hour as you expound upon this noble topic.

The U.S. Court of Appeals for the Third Circuit has ruled that the New Jersey Board of Public Utilities (BPU) is preempted under the federal Public Utility Regulatory Policies Act (PURPA) from ordering a qualifying facility (QF) and an electric utility to renegotiate or settle on a buy out of a previously approved purchased-power agreement. The QF, Freehold Cogeneration Associates, L.P. had refused to alter its contract with Jersey Central Power & Light Co.

This fight is for the heart and soul of regulation everywhere. The Federal Energy Regulatory Commission (FERC) won the first round on February 22, but I think there's more to come.

The fight involves incentives for nonutility generators (NUGs). It also touches on PURPA (em the Public Utility Regulatory Policies Act of 1978 (em which guarantees a market to cogenerators or power producers (QFs) who qualify. But more important, this battle involves regulatory philosophy.

After 40 years of wandering in the wilderness as a minority party, House Republicans are ready to slash and burn what they see as a bloated federal bureaucracy. The next two years will demonstrate just how powerful the legislative branch can be when both House and Senate are controlled by a strong-willed party on a mission. Electric industry officials seem optimistic, but cautious, about this Republican revolution.

(A.G.A.) forecasts a 3.4-percent increase in natural gas use for 1995, to 22.5 quadrillion British thermal units (quads) from 21.7 quads in 1994. "Such an increase would continue an eight-year trend that has seen natural gas consumption rise nearly 30 percent since 1986," Michael Baly, A.G.A. president, noted in a presentation to New York securities analysts.

Merger planning is touchy business. In a hotel crowded with utility executives gathered together to talk mergers, you notice everything: Who's there and who isn't. Who's talking to whom. Who came with his lawyers. And who's always out in the hall on the phone.

That's why I had so much fun last month at the Eighth Annual Utility M&A Symposium, sponsored by EXNET (Public Utilities Reports and The Management Exchange).

Southern California Edison (SCE) has asked the Federal Energy Regulatory Commission (FERC) to halt the state's Biennial Resource Plan Update energy auction (BRPU). SCE charges that the California Public Utilities Commission (CPUC) violated the Public Utility Regulatory Policies Act (PURPA) and FERC regulations by reinstating the auction late last year.

SCE believes that the auction, which requires California utilities to enter purchased-power contracts, could increase its potential stranded costs by up to $4 billion (in nominal dollars).