The Wisconsin Public Service Commission (PSC) has approved an affiliated interest agreement between Madison Gas & Electric Co., a natural gas local distribution company (LDC), and its subsidiary Great Lakes Energy Corp., an energy marketer, to reflect changing conditions in the retail market for natural gas. The approved agreement separates all gas procurement and sales functions, including physical separation of employees of both companies.

Changing market conditions and newly instituted price-cap regulation give electric utilities a greater disincentive for demand-side management (DSM), according to the Maine Public Utilities Commission (PUC). While approving a 1996 DSM savings target of 36 million kilowatt-hours (Kwh) for Central Maine Power Co. under the utility's new price-cap plan (see Re Central Maine Power Co., 159 PUR4th 209 (Me.P.U.C.

Energy utilities in California will be permitted to set charges at a level high enough to earn an 11.6-percent return on equity (ROE) for 1996. Pacific Gas and Electric Co. was also awarded a separate 50-basis-point risk premium (12.01 percent) for the 70/30 debt/equity ratio associated with its natural gas pipeline expansion project.

The award reduces the ROE for all of the state's utilities except Sierra Pacific Power Co., which operated under an ROE allowance of 11.3 percent last year. Both Southwest Gas Corp.

The Washington Utilities and Transportation Commission (UTC) has issued a policy statement of eight principles as a guide to adapting its regulatory authority to the "more competitive circumstances facing the state's electric industry." The statement is not binding on the UTC or on parties to formal proceedings.

The UTC said it would strive to promote the "natural" evolution of efficient markets, but that its primary goals would remain affordable prices for electric service, protecting the long-term integrity of the system, and preventing noneconomic bypass and attendant

Is One Merger as Good as Another?

In late November, the Federal Energy Regulatory Commission (FERC) put off immediate approval of the proposed merger between The Washington Water Power Co. and Sierra Pacific Resources (to form "Altus"), and set the case for hearing. The reason? The FERC doubted whether the merger would achieve operational efficiencies between the two noncontiguous utilities.

The Federal Energy Regulatory Commission (FERC) has released proposed rules for real-time information networks and standards of conduct, a "critical" supplement to its electric transmission open-access NOPR (Docket No. RM95-9-000). The FERC wants all utilities to set up information networks that give wholesale sellers and purchasers of electricity equal access to information concerning availability and prices.

The Federal Energy Regulatory Commission (FERC) has revised its policy on potential abuses by affiliated power marketers, lifting restrictions on marketing transactions involving affiliates that do not have captive customers. The changes stem from a case involving USGen Power Services, L.P., an affiliate of Pacific Gas & Electric Co. (PG&E) that sought to market power to and from affiliated and nonaffiliated entities, including exempt wholesale generators (EWGs) and power marketers, but not to PG&E (Docket No.

The board of directors of the American Gas Association (A.G.A.) has adopted a resolution asking Congress to repeal the Public Utility Holding Company Act (PUHCA) and establishing PUHCA repeal as a high priority. A.G.A. says it will actively lobby Congress and the Clinton Administration for repeal. The association seeks to continue the tangible consumer benefits of deregulation and increased competition in the natural gas industry. The A.G.A.

The Senate subcommittee funding the Department of Energy (DOE) may use a carrot-and-stick approach this year to push DOE into finding a quicker solution to the long- and short-term nuclear waste crisis. The debate to get the waste stored safely underground promises an appropriations war that could rival the federal budget skirmish.

Current law authorizes only a permanent repository, not interim storage. Utilities, however, claim they're running out of room to cache their waste.

If you attended any energy conference in the past year, even one on natural gas, I am confident that at least one panel was devoted to the restructuring of the electric industry.