The Pennsylvania Commonwealth Court has upheld a state commission order that allowed Pennsylvania Power & Light Co.

Finding no adverse consequences, but warning that the record was not yet complete, the Arkansas Public Service Commission has granted preliminary approval of a plan for the merger of Houston Industries, Inc., the holding company for Houston Lighting and Power Co., and NorAm Energy Corp., which provides natural gas distribution service in several states via three operating divisions, Arkla, Entex, and Minnegasco.

PSC Approval will remain conditional pending the outcome of related merger proceedings in Louisiana, Mississippi, and Minnesota, as well as before the Federal Energy Regulato

The West Virginia Public Service Commission (PSC) has criticized a request by Shenandoah Gas Co. to require its residential and commercial customers to pay the lion's share of a newly approved rate increase, citing the utility's cost studies as "flawed" and its cost allocations as having compounded the error.

The company had argued that its cost studies showed that interruptible customers were already generating a 45 percent rate of return, while rates for its firm customers produced a negative return on the investment necessary to serve them.

The North Carolina Utilities Commission has approved a proposal by Public Service Co. of North Carolina (the "LDC") to market gas supplies and unused pipeline capacity to large users through a joint venture between its own affiliate and a non-affiliated gas marketer.

The affiliate, PSNC Production Corporation, will own 50% of the new venture. The second venture partner is an unnamed, nonaffiliated marketing company that operates on a nationwide basis.

A federal court blocks FCC's "TELRIC" cost rule, but some states endorse it anyway.

With the Federal Communications Commission (FCC) having lost a major court battle last fall, the state public utility commission (PUCs) have taken the lead in the deregulation of local telephone service promised a year ago when President Bill Clinton signed the Telecommunications Act of 1996 (the "Act").

Some states have opened generic investigations; others have chosen to proceed case-by-case in individual arbitration proceedings.

Sound bites from state and federal regulators.

Natural Gas Briefs

Gas Marketing Affiliates. Indiana finds no jurisdiction to regulate Proliance Energy, LLC, a brokering and energy services affiliate of Indiana Gas Co., Inc. and Citizens Gas and Coke Utility, but says it will regulate the utilities in their transactions with Proliance. Case No. 40437, Sept. 27, 1996 (Ind.U.R.C.).

Gas Regulatory Reform. Ohio proposes alternative regulatory procedures for natural gas local distribution companies. Case No. 96-700-GA-ORD, Sept. 26, 1996 (Ohio P.U.C.).

Employee Incentives.

A group of 40 state agencies has joined with 33 utilities and the Nuclear Waste Strategy Coalition (NWSC) to file a lawsuit in federal district court after the Department of Energy (DOE) reported that it would not comply with a federal court mandate to accept high-level radioactive waste for permanent storage as of January 31, 1998, and begin removing such waste from temporary storage at some 73 power plants in 34 states.

The D.C. Circuit had ruled against the DOE last summer. (See, Indiana-Michigan Power Co. v.

A Georgia-based consumer advocacy group, the Campaign for a Prosperous Georgia (CPG), has asked the Securities and Exchange Commission to halt a move by The Southern Company to use up to 100 percent of its retained earnings for a $2.75 billion acquisition of 80 percent of the Asian utility company, Consolidated Electric Power of Asia.

Among other claims, CPG wants the SEC to reconsider an April 1996 decision that granted an exemption to The Southern Company from the provisions of the Public Utility Holding Company Act (PUHCA).

Worries in Congress.

Having decided that California's three major investor-owned utilities (IOUs) exert greater market power in generation and transmission than the IOUs had let on in detailed studies filed last summer, but finding no purpose in asking for a second round of hefty documents, the Federal Energy Regulatory Commission (FERC) has decided to explore options for mitigating such market power before approving the proposal by the IOUs (Southern California Edison Co., Pacific Gas & Electric Co., and San Diego Gas and Electric Co.) to form a Power Exchange (PX) and Independent system Operator (ISO).

Dakota Gas Plant. FERC reverses law judge, ok's settlement on rates for synthetic natural gas produced at the Dakota Gasification plant. Commissioner James Hoecker terms result "unhappy," citing jurisdictional constraints: "I feel we are supporting a resolution in this case that otherwise would not be in the public interest." Dkt. Nos. RP93-100-000 et al., Dec. 18, 1996.

Reactor Designs. NRC certifies two new designs for nuclear reactors: ASEA Brown Boveri-Combustion Engineering System 80+, and General Electric Nuclear Energy Advanced Boiling Water Reactor.