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Fortnightly Magazine - August 1997

Moody's Predicts Greater Polarity in IPP Ratings

Moody's Investors Service examines key credit considerations in the evolving independent power production industry in a new report. The report predicts greater polarity in ratings of such companies.

The Haves and the Have-Nots: Access to Capital, Diversified Portfolios says the IPP industry will become dominated by "first-tier" companies that exhibit financial flexibility needed to survive in an increasingly uncertain environment. Such companies will possess diversified assets and ability to generate cash.

Byline: 
Lori A. Burkhart
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Oregon Disallows Costs for Executive Compensation

The Oregon Public Utility Commission has directed U S WEST Communications Inc. to reduce rates by $97.4 million and to refund ratepayers an additional $102 million, after having excluded from rates some $4 million in executive bonuses and incentive pay plans for management.

The refund corrects interim rates left in effect last year when the commission had terminated an alternative rate plan, finding that service quality had dropped since 1991, and the incentive-based program had begun. See, Re U S WEST Communications, Inc., UT 80, Order No.

Byline: 
Phillip S. Cross
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California Chooses Transition Charge for Recovery

The California Public Utilities Commission has established guidelines for the recovery of stranded costs over four years through a competition transition charge collected from existing and future customers, including those who depart the system.

The June 11 order allows recovery from 1998 through 2002 for costs associated with generation plants, nuclear settlements and QF contracts (Docket No. R.94-04-031/I.94-04-032). Costs associated with purchased power contracts, including QF contracts in place on Dec. 21, 1995, can be collected for the duration of the contract.

Byline: 
Lori A. Burkhart
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Florida Utility Expands Green Pricing Program

The Florida Public Service Commission has authorized Florida Power and Light Co. to set up a two-year green pricing research and development project under a settlement agreement between the utility and the state Legal Environmental Assistance Foundation.

The order allows FP&L to recover from all ratepayers up to $475,000 in administrative costs associated with the experiment. The commission had approved the program as proposed by the utility in an earlier ruling, but reviewed the matter further because of a complaint by LEAF.

Byline: 
Phillip S. Cross
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Michigan Competition Plan Meets Opposition

Putting aside calls for a faster-paced switch to the new industry format, the Michigan Public Service Commission has adopted a phase-in schedule for customer direct access to alternative electricity suppliers that runs through 2002. The order, which some have said needs additional work, also outlines stranded cost recovery policies and related securitization strategies.

Under the plan, 2.5 percent of each electric utility's retail load will become eligible for customer choice each year from 1997 through 2001, with all customers eligible in 2002.

Byline: 
Lori A. Burkhart, and Phillip S. Cross
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Pennsylvania Electric Restructuring Continues

The Pennsylvania Public Utility Commission has taken new steps in its ongoing effort to restructure the state's electric industry, proposing regulations to govern customer choice of energy suppliers and securitization of stranded costs.

The PUC's new actions on retail choice and stranded costs were designed to comply with state legislation passed last December, known as the Electricity Generation Customer Choice and Competition Act. See, 66 Pa.C.S. secs. 2801 et seq.

In fact, the PUC began last January to implement the new state legislation.

Byline: 
Phillip S. Cross
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Perspective

Canadian markets beckon U.S. utilities, and vice versa, demanding greater access to transmission lines to bridge the gap.

When I took the job of president of Niagara Mohawk Power Corp., way up North, near the Canadian border, I shared the news with a close friend. I told him how excited I was to be joining an innovative team that was out in front, breaking new ground in the competitive arenas rapidly evolving in the electric power industry.

Byline: 
Albert J. Budney, Jr.
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Off Peak

Today's critics decry stranded costs, yet fail to cover their tracks.

Many of today's most vociferous critics of stranded cost recovery were once among the most ardent supporters of the nuclear plants they now disavow.

Back in the '70s, when electric utilities and regulators laid out their long-term plans, nuclear power played a leading role, and American industry largely concurred. Now, however, 20 years later, the business sector sings a new tune. "I told you so," the refrain goes.

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Climate Change at the Stack: Posturing Toward Kyoto

U.S., rest of the world ponder CO2 emissions, with utilities caught in the middle.

Four months from now, in Kyoto, Japan, international policy negotiators will decide how quickly to curtail carbon dioxide emissions and allay the world's fears of melting ice caps and rising temperatures.

The amendments to the United Nations Framework Convention on Climate Change, or FCCC, are likely to be founded more on world and domestic politics than on science. Industry climatologists, after all, insist the atmosphere is not warming as fast as others predict, and could be, in fact, cooling.

Byline: 
Joseph F. Schuler, Jr.
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Murkowski's Senate Panel Hears Consumers Groups

Pocketbook issues, like all others, tend to split along political lines.

Meeting on June 12, Sen. Frank Murkowski (R-Alaska) and members of the Senate Energy and Natural Resources Committee focused for the first time on what customers really think about choosing their own energy vendor.

Nevertheless, despite the shift toward pocketbook issues, and away from so-called "inside-the-Beltway" concerns, the testimony came largely from organized consumer groups, and it appeared split down political lines: urban vs. rural, private vs. public, business vs. residential.

Byline: 
Lori M. Rodgers
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