In a generic case, the Vermont Public Service Board (PSB) has announced guidelines for the development of restructuring plans for the electric utility industry. It asked the parties to the case to focus on the issues of customer choice, stranded costs, and stranded benefits. Plans for broad, industrywide restructuring must also address: 1) economic net benefits, 2) jurisdiction, 3) interstate coordination, 4) policy balance and fairness, and 5) pragmatic concerns such as competitive or market distortions.

Citing competition in residential energy markets, the Connecticut Department of Public Utility Control (DPUC) has approved a new heat-pump rate discount and installation rebate program proposed by United Illuminating Co. (em but with an eye trained on market share.

The DPUC acknowledged a prior reluctance to approve tariffs that promote specific end uses, but found that competition justified new approaches. It also cited other positive factors, including: 1) the utility's long-term surplus capacity outlook, 2) its low marginal cost, and 3) heat pump efficiencies.

The Tennessee Public Service Commission (PSC) has directed South Central Bell Telephone Co., a local exchange carrier (LEC), to reduce rates by $56,285 million under its existing price-cap regulation plan. According to the PSC, the LEC had achieved overall earnings "well above the authorized rate of return" during the rate period ending March 31, 1995.

Sound bites from state and federal regulators.

Gas System Acquisitions. Alabama Gas Corp. can proceed to acquire gas distribution system of City of LaFayette, AL, and apply systemwide rates to all new customers. Order affirms capitalized income method to set fair-market value for the acquisition, rejects proposal by the Attorney General to switch to a discounted cash-flow method. Dkt. U-3644, Jan. 8, 1996 (Ala.P.S.C.).

Low-income Discounts.

The Federal Energy Regulatory Commission (FERC) has announced that it will revisit its 30-year old electric utility merger policy (Docket No. RM96-6-000). The Notice of Inquiry (NOI), Merger Policy Under the Federal Power Act, also orders an expedited hearing on the proposed merger between Wisconsin Electric Power Co. (WEPCO) and Northern States Power Co. (NSP) to form "Primergy" (Docket Nos.

The Federal Energy Regulatory Commission (FERC) has approved a policy statement, Alternatives to Traditional Cost of Service Ratemaking for Natural Gas Pipelines, giving pipelines greater flexibility to use market-based, negotiated/ recourse, incentive, and other alternative rates (Docket Nos. RM95-6-000 and RM96-7-000). Pipelines may negotiate new rates with customers, but may not negotiate services that might degrade open-access service under Order 636. The FERC is still considering what type of service flexibility it should allow.

The Federal Energy Regulatory Commission (FERC) on January 24 held a technical conference on independent system operators (ISOs) and power pools, as part of its electric transmission open-access Notice of Proposed Rulemaking (NOPR). The FERC's question: Is it necessary in a competitive market for utilities to transfer control over transmission facilities to ISOs, and if so, what form should ISOs take? (18 CFR Part 35, Docket Nos. RM95-8-000 and RM94-7-001).

Divest yourself of generating plants or allow retail sales by competitors, and PURPA's mandatory purchase clause in section 210 will no longer hold.

That's the basic deal to be offered to investor-owned electric utilities under the Electric Power Competition Act of 1996 (H.R. 2929), a new bill to amend the Public Utility Regulatory Policies Act (PURPA) introduced by Rep. Edward J.

When Joel Singer headed the North American Gas Practice at Arthur D. Little, Inc., he helped large companies rethink business strategies to adapt to deregulating markets. Singer called his business model the "competitive strategy framework": "You do not reengineer your way into growth. You've got to figure out what's the growth strategy, then look at building business processes around that."

Singer's approach is becoming evident at Bay State Gas Co. in Westborough, MA.

Standard & Poor's (S&P) has issued its first quarterly report on public power and rural electric cooperatives: Muni Utility Ratings: 1995, 1996, and Beyond. The report predicts that the shakeout in credit quality that has characterized the municipal utility industry since 1993 will continue in 1996. Downgrades and negative outlook assignments will continue to outpace positive ratings actions, but not at the 1995 rate.