The California Memorandum of Understanding (MOU) is an agreement between Southern California Edison Co. (SCE), the California Manufacturers' Association, the California Large Energy Consumers' Association, and the Independent Energy Producers. It tackles three major issues:s recovery of stranded assets

s market power

s market structure.

If the MOU is eventually endorsed, it might be a landmark in electric restructuring \(em and not only in California.

Does the size of a company affect the rate of return it should earn? If smaller companies should earn a higher return than larger firms, then small utilities, because of their size, should be allowed to adjust the rates they charge to customers.By far the most notable and well-documented apparent anomaly in the stock market is the effect of company size on equity returns. The first study focusing on the impact that company size exerts on security returns was performed by Rolf W.

Regulatory Commission (FERC) to approve a set of market-based rates for short-term firm transportation, interruptible transportation, temporary capacity release, and storage services (Docket No. RP95-408).

Otter Tail Power Co. (OTP) president John MacFarlane is pursuing the utility's plan to manage the assets of a portion of the Western Area Power Administration (WAPA) for a five-year period, to smooth the way toward privatization of the nation's power marketing agencies (PMAs).

MacFarlane has written for support to the senators who represent OTP's utility's three-state service area: Byron Dorgan (D-ND), Kent Conrad (D-ND), Tom Daschle (D-SD), Larry Pressler (R-SD), Rod Grams (R-MN), and Paul Wellstone (D-MN).

The Gas Research Institute (GRI) thinks total natural gas demand, driven by strong underlying economic activity, could grow to more than 29 quads by 2015, a 1.5-percent yearly increase from 1994's 21.4 quads (see, Baseline Projection of U.S. Energy Supply and Demand, GRI, 1996 ed.). This latest projection "describes an era of low energy prices, not just low oil prices," said Paul D. Holtberg, GRI executive economist, baseline analysis.

According to the report, gas demand for electric generation will account for half the growth.

The U.S. General Accounting Office (GAO) has released its report on the Tennessee Valley Authority (TVA), Financial Problems Raise Questions About Long-Term Viability (em a report that TVA strongly disputes.

One of the iron rules of competition and open markets is that there are winners and losers. Winners tend to win very big; losers tend to lose everything and disappear, through absorption or insolvency. As deregulation takes hold, high-cost producers and less adroit managers may find themselves steamrollered by emerging strongmen and entrepreneurial upstarts. These rivals may usurp segments of their business by bidding the job cheaper and still making money, leaving a rising tide of shareholder suits in their wake.

Citing a need to prepare for the emerging competitive marketplace, Central Illinois Light Co. has volunteered to experiment with direct access for all of its customers. The utility has asked the Illinois Commerce Commission to consider two separate pilot programs that will allow customers to purchase some or all of their power requirements from other suppliers.

Standard & Poor's (S&P) CreditWeek Municipal notes that municipal electric utilities are resisting the investor-owned utility (IOU) merger trend in favor of competing through internal cost controls and sharing of services. The main reason, according to S&P directors Marla Fox and William Cox, is that municipals are political entities governed by city councils or appointed boards, and mergers would result in less authority for those decisionmakers.

Southwestern Public Service Co. (SPS) and Public Service Co. of Colorado (PSCC) have entered into a definitive merger agreement to form a public utility holding company that will cover one of the largest geographic areas in the nation. Size apart, the merger is unique in that SPS operates as part of ERCOT, and the two utilities are not interconnected. A new transmission line will be built to connect the two companies.

The new holding company will have combined annual revenues of $3 billion, and assets of $6 billion.