Stranded costs are those costs that electric utilities are currently permitted to recover through their rates but whose recovery may be impeded or prevented by the advent of competition in the industry. Estimates of these costs run from the tens to the hundreds of billions of dollars. Should regulators permit utilities to recover stranded costs while they take steps to promote competition in the electric power industry?

While reconsidering an earlier rate case order for New England Telephone & Telegraph Co., a telecommunications local exchange carrier (LEC), the Vermont Public Service Board (PSB) has approved an incentive regulation plan for the LEC and set out a series of recommendations to guide the development of a full price-cap regulation plan. Nevertheless, the PSB noted that a problem had developed in the case as a result of combining the revenue requirement aspect of the rate proceeding with consideration of the LEC's price-cap plan.

To further competition in the state's telephone industry, the Florida Public Service Commission (PSC) has decided to require local exchange telephone carriers (LECs) to offer intraLATA presubscription as part of the access services provided for competitors in the toll-call market. It found the lack of "1+" dialing parity (experienced by customers who choose interexchange carriers (IXCs) rather than LECs for intraLATA toll calling) a competitive barrier that could be removed without diminshing access to basic telephone service for Florida consumers.

The Pennsylvania Public Utility Commission (PUC) has approved tariff revisions proposed by Pennsylvania Power & Light Co. (PP&L), an electric utility, to limit the availability of its interruptible services. The PUC also directed PP&L to file new interruptible rates at its next rate case, based on the cost of providing such service and on the value to the utility of maintaining its interruptible load.

The Florida Public Service Commission (PSC) has refused to settle a dispute between Florida Power Corp., an electric utility, and numerous qualified cogenerating facilities (QFs) over pricing terms contained in negotiated purchased-power agreements previously approved as cost-effective. The PSC ruled that interpretation of provisions in negotiated, as opposed to approved standard-offer, contracts between utilities and QFs was a matter for the courts and rejected allegations that review and approval gave the PSC continuing jurisdiction to interpret the contracts.

According to the Natural Gas Vehicle Coalition (em a national organization of local natural gas distributors, pipelines, and equipment manufacturers promoting natural gas vehicles (NGVs) (em the U.S. government supports our country's continued reliance on petroleum-based fuels for transportation through billions in subsidies and tax incentives.

The financial community's focus on utility competition has been riveted on the proceedings now in progress at state regulatory commissions. The fear that something immediately damaging will come out of these proceedings seems to have diminished in recent months, and the stock market has reacted favorably. However, regulatory developments are only one of four paths leading to competition; the others are the marketplace, the legislatures, and the courts.

As required under a conditional approval order issued in October, the Western Regional Transmission Association (WRTA) has filed its compliance agreement at the FERC (Docket No. ER94-1288-000). WRTA agrees to provide comparable transmission service, and has filed a transmission plan that gives individual members the right to make the final decisions on whether transmission facilities are built. WRTA has 31 members (em utilities, state agencies, and independent power producers (IPPs) (em that represent 70 percent of the transmission capabilities in the western United States.

The Federal Energy Regulatory Commission (FERC) has approved a final rule on charges and fees for hydroelectric projects. Annual charges will now be assessed beginning on the date construction starts rather than when a license is issued (Docket No. RM-93-7-000). The rule eliminates annual charges for minor licensees (em projects of 1.5 megawatts or less (em and caps annual charges at two percent of total costs incurred by the FERC. To update its regulation, the FERC also substituted kilowatts for horsepower to determine capacity.

The Independent Energy Producers (IEP), a Sacramento-based independent energy advocacy group, has announced that it will petition for the Federal Energy Regulatory Commission (FERC) to reconsider its ruling that the California Public Utilities Commission (CPUC) violated the Public Utility Regulatory Policies Act (PURPA) by requiring two utilities to purchase power at above avoided costs (FERC Docket Nos. EL95-16-000 and EL95-19-000).