Frontlines

A few weeks ago I picked up a copy of one of those law firm newsletters, this one published quarterly by Reid & Priest, titled the Utility Telecommunications Advisor.

Purchased Power Contracts: Marrying Production and Financial Efficiencies

Electric utilities incur indirect financial costs when they turn to unregulated generators (NUGs) to buy power. These indirect costs can lead to lower bond ratings and undermine competitive advantage, depending upon the type of contract.

In this case we analyzed the combined effects of NUG power purchases on generating and capital costs for a representative utility (Utility A) with a relatively large amount of NUG purchased power.

Revenue Caps or Price Caps? Robust Competition Later Means Healthy Choices New

The debate over restructuring the electric industry has encompassed a revisiting of the traditional rate-of-return (ROR) pricing model. Parties of widely divergent interests increasingly advocate alternatives. Under the label "performance-based regulation," these new pricing models share the objective of strengthening incentives for electric utilities incentives to pursue some specified "socially desirable" outcome.

Off Peak

As long as we're talking about "stranded costs," why not consider the "unearned gains" accrued during construction? Namely (em the allowance for funds used during construction (AFUDC) representing capitalized financing costs that built up to such high levels back in the 1970s, during the peak of the last construction cycle for baseload electric generating plants.

One can argue the policy: Did those 70's-era rules on AFUDC extract unwarranted economic rents for nuclear construction? Good or bad, those costs are sunk.

Court Reverses PSC on Sale of Telco Exchange

The Wyoming Supreme Court has ruled that the state Public Service Commission (PSC) acted outside of its authority when, in 1994, it directed U S WEST Communications, Inc., to sell a local telephone exchange to an unsuccessful bidder rather than to another company with whom the LEC had already contracted for the sale.

Earlier, the PSC had required upgrades in rural exchanges throughout the state, and had endorsed a plan to sell certain local exchanges to independent telephone companies in the public interest.

Gas Restructuring Leaves Doubts About IRP

In a case reviewing standards for integrated resource planning (IRP) set out in the Energy Policy Act of 1992 (EPAct), the Pennsylvania Public Utility Commission (PUC) has recognized that changes in the natural gas industry, combined with an evolution toward competition (both upstream and inside the city gate), "will make gas IRP a less-necessary commission function in order to insure least-cost gas service."

The PUC said most of its existing regulations were consistent with the federal standards; however, it rejected the EPAct standards regarding guaranteed profitability an

Rival Wins Gas Franchise in N.C.

The North Carolina Utilities Commission (NCUC) has granted a final certificate to Frontier Utilities of North Carolina, Inc., to provide natural gas local distribution service to four previously unserved counties. It found Frontier's proposed rates reasonable when compared to alternate energy sources in the four-county area, though somewhat higher than those proposed by Piedmont Natural Gas Co., Inc., an established LDC that had also applied for the franchise.

Frontier is a new company formed specifically to serve the four counties.

Yellow Pages Ruling Reversed

According to the Arizona Court of Appeals, the state Corporation Commission has violated an agreement with U S WEST Communications, Inc., governing the spinoff of the company's Yellow Pages publishing business as an unregulated enterprise.

The court agreed with U S WEST that the commission erred when it imputed $60.684 million in directory publishing profits to the carrier's regulated operations (em a move that had captured all profits earned by the publishing company above the rate of return of 11.4 percent authorized for regulated services.