Fortnightly Magazine - July 1 1995

Tennessee Valley Authority (TVA) chairman Craven Crowell says he will resist General Accounting Office (GAO) pressure to raise TVA rates. According to Crowell, a forthcoming GAO report criticizes TVA for not raising rates to reduce debt, and suggests privatization. "Everyone recognizes that TVA's debt is large, but the size of the debt is not as important as our ability to manage it," Crowell maintains, noting that a recent study by utility consulting firm Palmer Bellevue concludes that TVA can remain competitive by effectively managing the debt.

The Federal Energy Regulatory Commission (FERC) has upheld its February 22 ruling that the California Public Utilities Commission (CPUC) violated federal law by not considering all electric power sources in determining the avoided costs of electric utilities (Docket Nos. EL95-16-001 and EL95-19-001). A unanimous FERC had found the CPUC's Biennial Resource Plan Update auction in violation of the Public Utility Regulatory Policies Act (PURPA).

One need only reflect upon the primary sponsors of current efforts to repeal section 210 of the Public Utility Regulatory Policies Act of 1978 (PURPA) to begin to understand the folly of these efforts for the nation. The sponsors do not represent electricity ratepayers, who are claimed to be overpaying billions of dollars as a result of PURPA.

Does competition justify higher salaries for utility executives? Some regulators have suggested the opposite. Others argue that ratepayers must benefit directly from any incentives offered to utility managers.

The Vermont Public Service Board (PSB) recently forced stockholders to pay a share of executive compensation costs for two utilities (em Green Mountain Power Co. and Central Vermont Public Service Corp. (em that exhibited higher-than-average executive compensation, and capped compensation for rate cases.