The Michigan Public Service Commission (PSC) has rejected a request for expedited approval of a special contract between Consumers Power Co. and a natural gas transportation customer, the James River Corp. Consumers Power negotiated the contract when it learned that James River could bypass the local gas distribution system through a direct connection with a nearby pipeline operated by Panhandle Eastern Pipe Line Corp. The utility claimed that James River could rescind the contract and arrange for bypass service if approval was not obtained by February 3, 1995.

The Florida Public Service Commission (PSC) has decided to expand interconnection for telecommunications switched-access service by requiring local exchange carriers (LECs) to offer virtual collocation services upon request. The PSC approved pricing flexibility in the form of zone density pricing for the new collocation tariffs.

The Illinois Commerce Commission (ICC) has approved a $303.2-million rate increase for Commonwealth Edison Co. In approving a rate of return on equity (ROE) allowance of 12.28 percent, the ICC chose an ROE presentation that "equally weighs the quarterly DCF and risk-premium based results." The increase reflects the ICC's finding that the company's Byron 2 and Braidwood 1 & 2 nuclear generating facilities are fully used and useful and eligible for rate recovery.

The New Jersey Board of Public Utilities (BPU) has announced an interim policy requiring electric utilities to "market test" all proposals for new capacity additions. The requirement grew out of a highly contentious proceeding involving a failed proposal by Jersey Central Power & Light Co. to purchase an interest in generating facilities from Duquesne Power & Light Co. in Pennsylvania and to construct major transmission facilities.

The Illinois Commerce Commission (ICC) has approved special discount rate tariffs to help Illinois Power Co., an electric utility, meet ongoing competition from municipal electric utilities within its service territory.

The Kentucky Public Service Commission (PSC) has moved closer to full competition in the telecommunications intraLATA market by approving an implementation schedule, monitoring rules, and cost-recovery methods for intraLATA equal access. It had established the equal access, or "dialing parity," goal in a 1991 order on competition in the telephone market.

The California Public Utilities Commission (CPUC) has denied applications for rehearing and a request for a stay of its recent decision to expand intraLATA competition and redesign rates for local exchange carriers to prevent revenue losses and ensure the proper pricing of bundled competitive services. Re Alternative Regulatory Frameworks for Local Exchange Carriers, I.87-11-033; Application Nos. 85-01-034 et al., Decision 95-01-047, Jan 24., 1995 (Cal.P.U.C.). t

Phillip S. Cross is an associate legal editor of PUBLIC UTILITIES FORTNIGHTLY.

A TRANSFORMING EVENT

Retail sales of gas and electricity run about $300 billion a year. The deregulation of energy production, wholesale logistics, and bulk consumption has brought competition to about 40 to 45 percent of the value chain from wellhead and busbar to the retail meter.

The advent of a competitive electric utility industry will fundamentally change the role of fuels in the industry. The fact that fuel is the dominant variable cost in power generation will reverse the relationship between the fuels and power production functions in many companies. Only plants that are competitive will operate; only operating plants will produce revenues.

This year the Federal Energy Regulatory Commission (FERC) plans to examine the resale of firm natural gas transportation rights, often referred to as the secondary market. The current regulatory structure, which provides for "capacity release" through an electronic bulletin board (EBB), was born in November 1993. How would this secondary market behave under different regulatory or market assumptions?