I am shocked that a respected and learned analyst of the utility industry like Charles Studness would espouse a position that stranded-cost recovery is somehow "un-American" ("Stranded-cost Recovery: It's Un-American," Financial News, July 15, 1996, p. 43).
Contrary to the claims of Mr. Studness, recovery of stranded cost is a fundamental right protected by the U.S. Constitution.
Despite two years of debate, little progress has been made toward a solution to the issue of stranded costs. And since the two sides have almost no common ground, any accommodation seems unlikely. Utilities that seek stranded-cost recovery appear to have the upper hand at present, but the stiffest resistance still lies ahead. The Federal Energy Regulatory Commission's Order 888 clearly favors utilities, but customer reaction signals a shift to another venue.
The restructuring debate in the electric industry has focused on nuclear assets at risk for "stranding" under deregulation, while another issue has largely eluded public scrutiny: accumulated deferred federal income taxes (ADFITs). ADFITs represent money that utilities have received from ratepayers to cover federal tax expenses not yet actually recognized and paid.
Investors are taking stock
of utility exposure to price competition.The utility trade press and even the general financial press have featured the views of regulators, utility executives, legislators, and various consumer advocates on the stranded-cost question. Stranded costs easily represent the most contentious issue facing the electric industry as it moves to an era of competition.
Filings Against FERC's Pro Forma Tariffs
AS ONE MIGHT EXPECT, THE VARIATIONS REFLECT THE HISTORIC TENSION BETWEEN NATIVE LOAD AND WHOLESALE TRANSACTIONS.
It comes as no surprise that regulated investor-owned utilities (IOUs) hold divergent views on the restructuring of the electric industry. Size, generation cost, transmission access, customer loyalty, and the friendliness of state regulators all factor into their individual visions of restructuring.
The merger voltage (I) is rising on the electric grid, but it remains to be seen which will win out: current (E) policy or resistance (R) to it.
Recovery of stranded investment is clearly the central point of contention in the debate over utility competition. Customers oppose competition and utilities favor it (em for what appear to be clear-cut reasons. Recovery would delay the benefits of competition for customers, but would give utilities additional cash and temporary protection against competitive price pressures. The battle has unfortunately turned into a morality play that centers on the right to recover stranded investment.
Anchor Glass Tries to Shake JCP&L Stranglehold
By Joseph F. Schuler, Jr.
Why assume that a city or town
can't run a power plant?
It wasn't a demand for a $2-million rate cut. It was a request for a rate in line with neighboring New Jersey utilities.
That's how Walter J.
For the partners in a utility merger, the celebration must wait. After opening the most delicate of dialogues, and then negotiating the price and closing the deal, the merger partners must yet gain the approval of regulators. The application may lie sealed in its FedEx pouch, safely on its way to Washington.