Fortnightly Magazine - October 1 1995

Heat Pump Program Fails Test in Arkansas

The Arkansas Public Service Commission (PSC) has rejected a set of promotional programs proposed by Southwestern Electric Power Co. that included incentives for customers to install heat pumps and electric hot water heaters. The PSC found that the programs came down heavily on the side of fuel substitution as opposed to serving conservation goals.

LDC to Revamp Supply Costs Accounting

In a case involving automatic adjustment clause procedures for state utilities, the Minnesota Public Service Commission (PSC) has directed Northern States Power Co. to make major modifications to its accounting system for gas costs. While approving a requested variance of its adjustment clause rules to allow the utility to recover a $1.05 million undercollection in its gas cost true-up rate, the PSC found the error due to the complexity of accounting for gas sales.

LDC Settles Gas Pipeline Safety Case

The Ohio Public Utilities Commission (PUC) has approved a settlement agreement in a case involving a safety code investigation of Columbia Gas of Ohio, Inc., a natural gas local distribution company. The PUC had directed its staff to investigate whether Columbia Gas had violated safety code provisions governing maximum allowable operating pressures for pipeline segments.

Conn. Updates Gas Regulation

The Connecticut Department of Public Utility Control (DPUC) has adopted new cost-of-service guidelines allowing natural gas local distribution companies (LDCs) to develop unbundled rate structures, including cost-based firm transportation rates. The DPUC also issued suggestions for refining existing supply and demand forecasting methods. According to the DPUC, current cost-of-service studies did not adequately address interclass subsidies at existing rate levels.

Fla. Updates Water ROEs

In a preliminary ruling, the Florida Public Service Commission (PSC) has proposed several changes to its rules for setting a generic rate of return on common equity (ROE) for water utilities. The proposed leverage formula produces a suggested ROE range of 10.18 to 11.88 percent, based on an equity ratio of 40 percent. The change represents an increase of 55 basis points over the midpoint indicated by the existing formula. According to the PSC, the update incorporates changes in underlying market conditions, including bond yields and required rates of return.

Montana and Iowa Reject EPAct Section 115

The Montana Public Service Commission (PSC) has decided not to adopt federal standards for natural gas integrated resource planning (IRP) and demand-side management (DSM) contained in section 115 of the Energy Policy Act of 1992 (EPAct), concluding that current information did not support establishing formal standards in those areas. The PSC explained that the expected costs of future commission involvement in the matter outweigh the benefits that might reasonably be expected at this time. Re Section 115, Energy Policy Act of 1992, Order No. 5861, Docket No. 94.9.42, Aug.

Off Peak

"Througout much of the

history of generation, technology

devolved at a very slow pace after

the construction of the first generation

of large central generation stations. With

the development of nuclear energy in the

1940s and 1950s, the government promoted an

alternative energy source that was expected to

provide a cheap source of power as well as

provide a source of plutonium for nuclear

weapons development.

Collision or Coexistence: The FERC, the CPUC, and Electric Restructuring

Will the Crown accept the olive branch offered by its colony, or will conflict ensue? That was the question posed on July 13 by Thomas Page, CEO of San Diego Gas and Electric Co., at the "Western States Workshop on California Restructuring," the first industrywide meeting to discuss the policy proposals issued six weeks before by the California Public Utilities Commission (CPUC).The Crown sent its emissaries.

Gas Wary of Electric IRP/DSM

The American Gas Association (A.G.A.) has issued A Strategic Guide to IRP and DSM for Natural Gas Companies, prepared by Hampton Strategies, Inc. Because the evolution of IRP and DSM initiatives for electric and gas companies will be greatly affected by increased competition, the report contends, natural gas companies need to be familiar with issues and practices surrounding DSM cost recovery and profitability incentives.

Perspective

For almost a decade now, the Federal Energy Regulatory Commission (FERC) has pursued the goal of promoting competition in bulk-power markets, focusing on access to transmission as its primary tool to achieve that end. This trend first emerged in the 1987 PacifiCorp merger case. It gained momentum with the strong message sent by the Congress in the Energy Policy Act of 1992 (EPAct).

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