NOx Joke

EPA Proposal Has IOUs Fuming

Electric utilities single-handedly to reduce smog.

MIDWEST AND OHIO VALLEY STATES ARE EXPECTED to get hit hardest by the Environmental Protection Agency's proposal to reduce smog.

Ohio, for example, is home to American Electric Power, one of the biggest contributors of NOx emissions at nearly a half million pounds per year (see chart).

The EPA proposed Oct. 10 that 22 states reduce nitrogen oxide (em a key element of smog (em citing electric utilities as the main source.

The California Public Utilities Commission has approved an agreement that will resolve a multifaceted case concerning pricing of services and operation of intrastate natural gas pipeline facilities by Pacific Gas and Electric Co.

The agreement, known as the "Gas Accord," also initiated significant changes in the way PG&E operates its business by increasing competition and customer choice. To mitigate the effects of market power held by the company, the commission imposed a series of discounting restrictions on PG&E.

A cogeneration project approved by the Virginia State Corporation Commission will allow Virginia Electric and Power Co., the utility sponsor, to lease equipment to Chesapeake Paper Products Co., the project host (which will operate the gas-fired plant), and yet retain contractual rights to control certain aspects of operations and maintenance.

At the same time, however, the commission has nixed VEPCO's idea of organizing an affiliate "as an electric utility" to own and operate a pipeline lateral to supply natural gas to the plant.

Seeking to wrest control of public relations for electric competition from private "stakeholders," the California Public Utilities Commission has authorized the state's three largest investor-owned electric utilities (em Pacific Gas and Electric Co., San Diego Gas and Electric Co. and Southern California Edison Co. (em to spend $89.3 million for consumer education on electric restructuring, through mass media, mail, local outreach and a toll-free call center.

In a separate order, the PUC authorized PacifiCorp and Sierra Pacific Power Co.

The California Public Utilities Commission, citing restrictions that force electric utilities to buy and sell power through the state's power exchange, has rejected a request by Pacific Gas and Electric Co., to use energy-related financial derivatives (em futures, swaps and options, etc. (em to manage risk associated with volatility in gas and electric commodity markets.

According to the commission, the proposal by PG&E for blanket authority to employ derivatives would violate several aspects of its electric restructuring policy.

GAS COMPETITION PLAN. Colorado releases framework for rate and service unbundling for natural gas LDCs, which includes: treatment of stranded cost, utility affiliate participation in the competitive market and supplier obligations. Docket No. 97I-0336, Aug. 19, 1997 (Colo.P.U.C.).

Local Telco Rates. Idaho directs USWEST Communications Inc. to reduce annual revenues by $327,000 and approves proposal to compensate ratepayers $4.2 million for yellow pages revenues. It also sets the rate of return on equity at 11.2 percent.Case No. USW-S-96-5, Order No.

The House and Senate conference committee working on energy appropriations decided to cut funding for the Tennessee Valley Authority, then end it after 1998.

The Senate had proposed giving TVA $86 billion to fund nonenergy programs such as flood control and environmental programs (em $20 billion less than the amount proposed by the Clinton Administration. The House held out for less, agreeing to fund $70 million in 1998.

TVA Chair Craven Crowell said the $70 million, along with "carryover funds" from 1997, will allow TVA to meet its obligations.

Hydroelectric power generation by U.S. electric utilities increased 12 percent between 1995 and 1996, according to the latest publication by the DOE's Energy Information Administration. Hydro generation contrasted with output at gas-fired units. That dropped 15 percent to 263 billion kilowatt-hours (em the lowest level since 1993 (em partly due to a substantial increase in gas prices.

According to Electric Power Annual 1996 Volume 1, the average cost of gas delivered to electric utilities on a dollars-per-million-Btu basis was $2.64 in 1996, the highest since 1985.

Rep. Dan Schaefer (R-Colo.) insists he intends to help enact federal customer choice legislation with a certain start date. The chair of the Subcommittee on Energy and Power made the pledge Sept. 24 at the panel's 20th hearing on electric restructuring. The hearing's focus was on state and federal roles in enacting competition.

Schaefer pointed out that the Edison Electric Institute seeks to avoid a federal mandate on retail access, yet members are going back to their states to throw a wrench into deliberations on, or implementation of, restructuring.

Commissioner William L. Massey said four issues would dominate the fall electric agenda of the Federal Energy Regulatory Commission: Orders 888 and 889 implementation, mergers, independent system operators and reliability.

Speaking on Sept. 11 at the PowerMart Power '97 conference and expo in Houston, Massey said the FERC hoped to issue a major order this fall on elements of California restructuring to ease implementation of the ISO and power exchange by Jan. 1, 1998.