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Fortnightly Magazine - April 15 1997

Oglethorpe Divides Company, Develops New Contracts

Oglethorpe Power Corp. recently completed an extensive restructuring that transformed the generation and transmission power cooperative into three specialized companies better able to compete in a restructured electric market.

In addition, the company's board of directors has approved a deal that would allow Morgan Stanley Capital Group to supply Oglethorpe Power Co. one-half of its power needs for up to eight years. The deal has been presented to the 39 Electric Membership Corporations (EMCs) for final approval.

Byline: 
Lori A. Burkhart, and Elizabeth Striano
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Perspective

Do electric utilities understand how to earn profits for shareholders in a competitive market?

Here's one way to look at the problem. Gather a group of financial experts and ask this question: If a company's long-term bonds are rated AA, and yield 8 percent, what minimum return would you require from dividend yield and price appreciation to induce you to buy that company's stock?

The typical expert will say 12 percent, indicating a 4-percent premium (or spread) above AA bond yields.

Byline: 
John F. Childs
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Retail Gas Reform: Learning from the Georgia Model

New legislation would tackle the most difficult problem (em low load factors for small-volume customers.

We commend the Natural Gas Competition and Deregulation Act, SB 215, passed by the Georgia General Assembly in March. (Governor Zell Miller was expected to sign the bill in April.) The Georgia legislation envisions a new framework for regulating the retail gas market.

Byline: 
George R. Hall, and Richard J. Pierce, Jr.
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Marketing and Competing

Loyalty may depend more on age group than anything else.

Utilities may want to start asking their customers some personal questions.

Such as: "How old are you?"

Why? Because customer behavior may have more to do with age and other demographics than anything. For instance, younger customers compose the highest-switching segment. However, older customers tend to have more loyalty. But so too, these loyal customers are the hardest to woo from another supplier.

Byline: 
Kerry Diehl, and Rich Gillman
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Dynamic Scheduling: The Forgotten Issue

But not for long (em as power producers and

customers get more creative in matching plants with loads Dynamic scheduling is a "sleeper" issue in the move toward electric competition. Industry players are debating independent system operators. They are focusing on issues of governance and the form of transmission pricing. Consequently, they are ignoring critical issues concerning ancillary services. These services are not receiving the attention they deserve.

Byline: 
Eric Hirst, and Brendan Kirby
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New Orleans City Council Fights SEC Proposal

Calling a proposed Securities and Exchange Commission rule contrary to public policy and law, as well as a "de facto repeal of major provisions of the Public Utility Holding Company Act of 1935," the City Council of New Orleans has asked the Securities and Exchange Commission to withdraw its proposed Rule 58.

"For more than 60 years, PUHCA has shed light on the activities of utility holding companies," said Council President James M. Singleton.

Byline: 
Lori A. Burkhart
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Insurance Recovery for Manufactured Gas Plant Liabilities

Valuation, optimization and settlement strategies

oth gas and electric utilities face a variety of environmental issues arising from more than 1,500 former manufactured gas plant (MGP) sites, which supplied a major source of energy in the United States from the early 1800s to the mid-1900s. Using the standard operating procedures of the day, MGPs created and often disposed of byproducts such as coal and oil tars, tar/water emulsions, sludges, spent oxides (including cyanides), lampblack, ash and clinker.

Byline: 
Gayle S. Koch, Kenneth T. Wise, and Philip Hanser
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FERC Conference to Explore Gas Issues

The Federal Energy Regulatory Commission has issued its notice of a public conference on "Issues and Priorities for the Natural Gas Industry," which will be held May 29 and 30. The FERC wants to gather information to establish its regulatory goals and priorities in the post-Order 636 environment (Docket No PL97-1-000).

The FERC is requesting a broad analysis of present and future industry issues, including those deemed the highest priority for FERC action.

Byline: 
Lori A. Burkhart
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