Federal Appeals Court Upholds EWG Safe Harbor Regs

Turning back a challenge by the National Association of Regulatory Utility Commissioners (NARUC), the U.S. Court of Appeals for the District of Columbia Circuit has upheld federal regulations relaxing scrutiny of investments in exempt wholesale generators (EWGs) by electric utility holding companies.

Colorado Opens LEC Market

The Colorado legislature has enacted a new law designed to increase competition in the state's local telecommunications market (H.B. 95-1335). The statute directs the Colorado Public Utilities Commission (PUC) to remove all barriers to entry into the local telecommunications market "as soon as is practicable." State regulators are encouraged to use "interim marketplace mechanisms" where competition is not immediately possible, with the ultimate goal of replacing the existing regulatory framework with a fully competitive state telecommunications market.

Iowa Issues Gas Price-hedging Guidelines

Concluding its inquiry into the use of financial derivatives by the state's natural gas local distribution companies (LDCs), the Iowa Utilities Board (UB) has given utilities the burden of showing that financial transactions are not "overly speculative." At a minimum, the UB expects an LDC's financial position to be "clearly associated with a physical quantity of gas purchased at indexed prices." When discerning between hedging and speculating in a swap transaction, an LDC must show that the swap includes the same quantity, duration, and pricing reference point as the physical gas.

Maryland Opts for "Measured" Restructuring

The Maryland Public Service Commission (PSC) has completed its investigation of market competition and regulatory policies for the electric industry. The PSC chose a "measured approach," ruling against retail wheeling at this time while permitting, but not requiring, utility proposals for performance-based ratemaking.

The PSC described electricity rates in the state as "globally competitive," noting that Maryland's utilities were not encumbered by a lot of expensive nuclear power plants or high-cost cogeneration contracts.

Electric Restructing and the California "MOU"Alex Henney

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.

Financial News

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.

Columbia Gas Seeks Market Rates

As part of a request to increase annual revenues by approximately $147 million, Columbia Gas Transmission has asked the Federal Energy

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 Pursues WAPA

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).

GRI: Low Energy Prices Are Coming

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.

GAO Reports, TVA Retorts

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.