The New Jersey Board of Public Utilities (BPU) has approved a plan by Jersey Central Power & Light Co. to replace its existing economic development tariffs with a new "Business Enhancement Incentive" rider. The tariff revision would continue programs designed to further the building expansion and use plans of large customers by offering discounted rates, but would eliminate ineffective programs such as per-worker rebates, priority location rebates, and high energy-efficiency programs.

While approving a proposed rate discount program for new electric heating customers, the Maine Public Service Commission (PSC) has ruled that the program must meet "permanent load" requirements designed to protect ratepayers. Bangor Hydro-Electric Co. had filed proposals to market power to new electric heating customers at 5 cents per kilowatt-hour, as a temporary addition to its load requirements, with a price floor based on short-run marginal costs.

The Minnesota Public Utilities Commission (PUC) has authorized Northern Minnesota Utilities, a natural gas local distribution company (LDC), to insulate shareholders from the effects of losing a large firm sales customer by reallocating associated demand costs among remaining firm customer classes. It allowed the LDC to pass the increased costs through its purchased adjustment clause, finding that the utility was now alerted to the problem and had taken action to protect itself and its ratepayers from stranded costs caused by customers switching to interruptible transport service.

Companies: BRAZ (Brazos Electric Cooperative); COA (City of Austin); CPL (Central Power & Light); CPS (Central Public Service); GSU (Gulf States Utilities); HLP (Houston Lighting & Power); LCRA (Lower Colorado River Authority); SPS (Southwestern Public Service); SWEP (Southwestern Electric Power); TNP (Texas New Mexico Power); TU (Texas Utilities Electric); WTU (West Texas Utilities).Assumptions: Statewide economic dispatch, where all utilities receive the market-clearing marginal energy cost for their generation (similar to studies that Moody's Investors Service has

When an electric utility invests in a resource to serve its customers, it does so with the belief that the asset underlying the investment can be pledged as collateral to secure debt capital. But what happens if the asset is not owned by the company and, therefore, provides no collateral? The following situations illustrate:

Situation A

Electric utility "A" chooses to build a small generating plant to meet the future needs of its growing customer base.

DOUDIET:Stranded investment has overshadowed other financial issues in the transition to a competitive electric utility industry. For example, what will post-transitional companies look like? Will they attract growth-oriented investors?

Utilities as monopolies enjoyed unparalleled access to the capital markets because price was based on cost. That structure assured the ability to raise funds under any and all circumstances, but it created an atypical industry.

In its recent Notice of Proposed Rulemaking (NOPR) on wholesale competition and open-access transmission,1 the Federal Energy Regulatory Commission (FERC) has outlined a plan to revolutionize the electricity industry.

The restructuring of electric utilities is fundamentally a matter of national policy (em not a regulatory issue. Regulators are ill-suited to make national policy because they are conditioned to act within the limits of authority specifically granted by legislation, rather than to seek a fresh statutory mandate in response to changed conditions. Policymakers must assess political, social, economic, technological, regional, and national factors to measure the need for reform.

The competitive transformations of the natural gas and telecommunications industries are over a decade in the making. By contrast, competition in the electricity industry is still emerging. Special interests have defeated many proposed competitive reforms. For example, in 1988 the FERC failed in its attempt to adopt regulations to encourage competitive bidding and independent power producers (IPPs).1 Similarly, decades of forceful industry opposition delayed open access in bulk-power markets.