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Fortnightly Magazine - November 15 1995

Alternative Regulation Finds Favor in Missouri

The Missouri Public Service Commission (PSC) has approved an experimental alternative regulation plan for Union Electric Co., the largest regulated electric utility in the state. The new plan is part of a stipulation and agreement that includes a $30-million one-time customer refund and a $30-million annual rate reduction. The experiment (em scheduled to run between July 1, 1995, and June 30, 1998 (em involves a sharing of company earnings between ratepayers and shareholders.

Byline: 
Phillip S. Cross
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SNG Gets Transition Cost Refund

The Federal Energy Regulatory Commission (FERC) has approved a comprehensive settlement for Southern Natural Gas Co. (SNG), resolving the company's costs associated with its transition to Order 636. The settlement resolves

23 rate cases, reduces rates, and provides about

$146 million in customer refunds (Docket No. RP89-224-000, et al.). Protesting parties have been severed from the case.

The refunds, plus $9.1 million contributed by SNG, will serve as a credit toward customers' liability for SNG's cost of realigning gas supplies under Order 636.

Byline: 
Lori A. Burkhart
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FERC Rejects NEPOOL Tariffs

The Federal Energy Regulatory Commission (FERC) has rejected a proposed amendment to the NEPOOL agreement that would have 1) facilitated negotiation of energy-only transactions by and among pool members, and 2) eliminated an otherwise applicable rate discount for transmitting energy involved in certain of those sales (Docket No. ER95-1466-000).A key aspect of NEPOOL operations is sharing of reserves. Each member is assigned a capacity responsibility equal to its load plus a share of the pool's combined reserve requirement.

Byline: 
Lori A. Burkhart
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Open-access Filings Climbing

The Federal Energy Regulatory Commission (FERC) has accepted seven more open-access electric transmission tariffs, bringing the total to 34. Another six are pending. The new tariffs were submitted by Jersey Central Power & Light Co.,

Mid-American Energy Co., Illinois Power Co., Wisconsin Power & Light Co., Western Resources, Inc., IES Utilities, and Commonwealth Electric Co.

"We consider this a success story," said FERC chair Elizabeth A. Moler. "While we still have a long way to go, this is real progress.

Byline: 
Lori A. Burkhart
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FERC Eases Gas Reporting Burden

The Federal Energy Regulatory Commission (FERC) has issued two final rules that seek to reduce the filing burden on the natural gas industry. One simplifies the Uniform System of Accounts and the FERC's reporting requirements (Docket No. RM95-4-000). The other simplifies the filing requirements for making rate and tariff changes under Part 154 of the regulations (Docket No. RM95-3-000).

The rules recognize that most interstate pipelines now serve as transporters rather than as merchants.

Byline: 
Lori A. Burkhart
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NEPOOL Goes for Marketers, Brokers

The New England Power Pool (NEPOOL) has filed an amendment to its agreement with the Federal Energy Regulatory Commission (FERC), seeking to open the power pool's membership to power marketers and brokers involved in the wholesale power business. Prior to the amendment, only electric utilities with retail customers, their affiliates, and independent power producers were eligible for membership. According to Frank Sabatino, chairman of NEPOOL's executive committee, the action is a significant first step in redefining NEPOOL's role in the increasingly competitive bulk-power market.

Byline: 
Lori A. Burkhart
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Financial News

Annual Annual EPS

Close Close Percent 52-Wk 52-Wk Div Div Book P/E Last

Company Region 06/30/95 10/02/95 Change High Low Rate Yield Value Ratio 12 Mos.Electric UtilitiesAEP Company Inc. Midwest 35.13 36.13 2.85 36.50 30.50 2.40 6.64 22.68 14 2.63

Unicom Corp.

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The Color of Just Compensation

Government agencies sometimes condemn privately owned operating utilities for their own use. Water companies, landfills, hydroelectric plants, and transportation lines are examples.

But these cases pose a problem: How to measure "just compensation," especially when regulators set the rates charged (and profits earned) by a privately owned utility at artificially low levels, even when the commodity is scarce and the need for the service high.

Byline: 
William D. Grand
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Washington Scraps Decoupling Mechanism

While approving a $58.8-million annual rate increase for Puget Sound Power & Light Co., the Washington Utilities and Transportation Commission (UTC) has also agreed to terminate its experimental periodic rate adjustment mechanism (PRAM).

Byline: 
Phillip S. Cross
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Penn. Regulators Upheld on Nuclear Decommissioning Costs

The Pennsylvania Supreme Court has upheld a Pennsylvania Public Utility Commission (PUC) ruling permitting Metropolitan Edison Co. to charge current ratepayers approximately $8.3 million a year for a portion of the cost of decommissioning the disabled Three Mile Island Unit 2 (TMI 2) nuclear generating plant. A lower court found the cost recovery improper because the plant was not and would not be "used and useful" in providing service to customers (see Irwin A. Popowsky v. Penn. PUC, 642 A.2d 648, 153 PUR4th 244 (Pa.Commw.Ct.

Byline: 
Phillip S. Cross
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