The U.S. Court of Appeals for the District of Columbia Circuit has overturned a Federal Energy Regulatory Commission (FERC) gas pipeline order, finding that the FERC had failed to support its decision to use a hypothetical capital structure in determining the pipeline's revenue requirement. In setting rates for Transcontinental Gas Pipeline, the FERC found the corporate parent's equity ratio of 16.27 percent abnormally low.
Commissioner Donald F. Santa, Jr., offered the Federal Energy Regulatory Commission's (FERC's) view of the "New Power Industry" at the 3rd annual electricity conference sponsored by the Western Energy and Communications Association and the Los Angeles Power Producers Association in Irvine, CA. Santa acknowledged current trends toward disaggregation, but said he doubted that a single, uniform, nationwide industry structure would emerge.
On December 12, 1994, Craven Crowell, chairman of the board of the Tennessee Valley Authority (TVA), issued two well-publicized announcements. First, TVA would not finish three of the nuclear units it has had under construction since the 1970s, unless it could find partners willing to share their construction costs (a prospect he subsequently characterized as "very slim,").1 Second, TVA planned to set an internal cap on its total debt at a level $2 to $3 billion below the $30-billion limit imposed by the Congress.
How risky are utility investments today? Regulators have always faced this question when setting the return component of rates under traditional rate base/rate of return regulation. With major industry restructuring looming, risk issues have become proportionately more important and complex. California regulators, for example, have increased the return for the state's electric utilities to account for investor worries over the pace of restructuring in the "Blue Book" proceeding.
The U.S. Court of Appeals for the Seventh Circuit has struck down as unconstitutional Illinois' 1991 Coal Act, which required state utility regulators to develop pollution control plans aimed at maximizing the use of high-sulfur coal mined in the state. The Act also allowed scrubber costs associated with the use of high-sulfur coal to be passed through to ratepayers.
The Michigan Court of Appeals has upheld a 1991 ruling by state regulators permitting Consumers Power Co. to recover $760 million in costs associated with its abandoned Midland nuclear generating project. The utility had requested recovery of over $2 billion after it halted construction in 1984.
The court rejected claims by ABATE, a ratepayers group, that the commission lacked authority to apply a "prudent investment" test to recovery of plant costs regardless of whether the investments eventually proved necessary or beneficial.
The Florida Public Service Commission (PSC) has decided to remove long-standing prohibitions on the resale of special access and private line telecommunications services provided by local exchange carriers (LECs) in the state. It said customers were more concerned about price and quality of service than whether facilities used to provide service were leased or owned by their provider. It added that recent restructuring of private-line service tariffs now ensured that LECs recover the cost of providing such services.
The Ohio Public Utilities Commission (PUC) has approved a merger agreement between Cleveland Electric Illuminating Co. and Toledo Edison Co. The utilities, wholly-owned subsidiaries of the same holding company (Centerior Energy Corp.), argued that the PUC had no statutory authority to review the details of the merger and should either dismiss or approve the application.
After considering the matter in several proceedings since 1991, the Hawaii Public Utilities Commission (PUC) has decided to permit the state's utilities to include in rates the full cost of switching from cash to accrual accounting for post-retirement benefits other than pensions (PBOPs) under SFAS 106. The PUC rejected proposals to require the utilities to alter certain SFAS 106 financial reporting requirements (em for example, extending the amortization period for recovery of PBOP transition costs from 20 to 40 years.
The Ohio Public Utilities Commission (PUC) has modified its natural gas transportation guidelines for local distribution companies (LDCs) to reflect changes in the industry under FERC Order 636. The PUC said its revisions would give customers a clearer understanding of service rights and curtailment procedures under the restructuring, and reflected the fundamental principle that each gas service must be offered on a comparable basis (em whether provided under bundled or unbundled tariffs.
