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Fortnightly Magazine - October 15 1995

Iowa Issues Gas Price-hedging Guidelines

Concluding its inquiry into the use of financial derivatives by the state's natural gas local distribution companies (LDCs), the Iowa Utilities Board (UB) has given utilities the burden of showing that financial transactions are not "overly speculative." At a minimum, the UB expects an LDC's financial position to be "clearly associated with a physical quantity of gas purchased at indexed prices." When discerning between hedging and speculating in a swap transaction, an LDC must show that the swap includes the same quantity, duration, and pricing reference point as the physical gas.
Byline: 
Phillip S. Cross
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Mailbag

Nice Try!American Gas Association president and CEO Michael Baly's response to my article ("Electric Reliability: How PJM Tripped on Gas-fired Plants," May 1, 1995) concerning the January 19, 1994, rolling blackouts in the PJM power pool is damage control that fails. Here are the facts that Mr. Baly either ignores or distorts:

Forty percent of PJM's coal generation did not operate during the rolling blackouts. At least 80 percent of PJM's total generation where gas was the primary or sole fuel did not operate when needed.

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Colorado Opens LEC Market

The Colorado legislature has enacted a new law designed to increase competition in the state's local telecommunications market (H.B. 95-1335). The statute directs the Colorado Public Utilities Commission (PUC) to remove all barriers to entry into the local telecommunications market "as soon as is practicable." State regulators are encouraged to use "interim marketplace mechanisms" where competition is not immediately possible, with the ultimate goal of replacing the existing regulatory framework with a fully competitive state telecommunications market.
Byline: 
Phillip S. Cross
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Utilities to Pool Power, Resources

General Public Utilities Corp. (GPU) and New Jersey Resources Corp. (NJR) have announced a pooling plan to manage the natural gas supply and capacity portfolios for up to 25 gas-fired generating stations that supply the GPU system in New Jersey and Pennsylvania. The pool will contain up to 1,100 megawatts of nonutility generation presently under contract with the GPU companies, as well as the companies' own generation. NJR will procure gas and provide other fuel-management services in conjunction with GPU system power dispatchers.

Byline: 
Lori A. Burkhart
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Federal Appeals Court Upholds EWG Safe Harbor Regs

Turning back a challenge by the National Association of Regulatory Utility Commissioners (NARUC), the U.S. Court of Appeals for the District of Columbia Circuit has upheld federal regulations relaxing scrutiny of investments in exempt wholesale generators (EWGs) by electric utility holding companies.
Byline: 
Phillip S. Cross
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Minnesota Coalition Joins Debate

A broad coalition of Minnesota electric cooperatives, municipal utilities, consumer advocates, and environmentalists has joined the debate over the restructuring of the state's electric industry.

Byline: 
Lori A. Burkhart
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TEP's Holding Co. Status on Hold

The staff of the Arizona Corporation Commission have recommended rejection of a Tucson Electric Power Co. (TEP) proposal to form a holding company, with TEP becoming a wholly-owned subsidiary. The proposal reflects TEP's desire to pursue opportunities in the domestic and international power markets, including development of independent power projects, acquisition of interests in existing power facilities privatized by foreign governments, and construction of cogeneration facilities to serve the energy needs of large industrial customers.

Byline: 
Lori A. Burkhart
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