Fortnightly Magazine - September 1 1996

While setting fuel-cost, adjustment-clause rates for Ohio Power Co., a subsidiary of American Electric Power Co., Inc. (AEP), the Ohio Public Utilities Commission (PUC) has ruled that the utility may include emissions-allowance-trading brokerage fees as an expense in determining its new electric fuel-component rate. The PUC found the brokerage fees "directly and justifiably related" to the sale of emission allowances, hence qualified for recovery under adjustment-clause regulations.

The Superior Court of New Jersey has upheld a state regulatory decision authorizing Bell Atlantic-New Jersey, Inc., a local exchange carrier (LEC), to switch from traditional regulation to a new price-cap plan. The new plan sets rates for noncompetitive LEC services by offsetting the annual inflation factor by a separate factor for cost savings due to productivity gains. For its part, the LEC agreed to accelerate deployment of new technologies, including a fiber-optic telecommunications network for the state. See, Re New Jersey Bell Telephone Co., 143 PUR4th 297 (N.J.B.R.C.

The Michigan Public Service Commission (PSC) has upheld a previous ruling finding it prudent for Michigan Consolidated Gas Co. to lock in a reasonable cost of gas through a series of gas-supply contract elections of alternative prices tied to the NYMEX (New York Mercantile Exchange) gas futures market. The PSC commented on its earlier ruling, however, to clarify that its remarks on the relatively small effect of the pricing decisions on the overall cost of gas for the local distribution company (slightly more than 1 percent) did not constitute a new policy.

While reviewing interconnection issues generic to competition in the telecommunications local exchange market, the Michigan Public Service Commission (PSC) has mandated that local exchange carriers (LECs) offer all basic local exchange services for resale at wholesale rates to competitors as well as affiliates.