Sound bites from state and federal regulators.

Build vs. Buy. Finding the "build" option as the cheapest alternative when two purchased power contracts expired, Florida PSC allows Tallahassee municipal electric utility to construct a 250-megawatt, combined-cycle, natural gas-fired power plant at an existing generation site. Docket No. 961512-EM, Order No. PSC-97-0659-FOF-EM, June 9, 1997 (Fla.P.S.C.).

Special Contract Discounts. New Jersey allows Elizabethtown Gas Co.

The Federal Energy Regulatory Commission has approved the merger of Brooklyn Union Gas Co. and neighboring Long Island Lighting Co., although concerns emerged about potential vertical market power. A new holding company, temporarily called HoldCo, will run the merged corporation.

At the same July 16 meeting, FERC indirectly sanctioned the merger of Texas-based Valero Energy Corp. with PG&E Corp., the holding company (created Jan. 1, 1997) for California-based Pacific Gas & Electric Co.

LILCO + Brooklyn Union.

U.S. District Court in New Hampshire has denied a move by customers and ratepayer groups to intervene in litigation on electric restructuring simply on the basis that they wanted lower rates.

The court said that a general desire to pay lower rates was not specific enough to intervene in the lawsuit, which was filed by several large electric utilities to challenge elements of the plan for competition approved in February by the state Public Utilities Commission. See, Re Restructuring New Hampshire's Electric Utility Industry, Order No. 22,514, 175 PUR4th 193 (N.H.P.U.C.).

The Federal Energy Regulatory Commission invited industry representatives to Washington, D.C., in July to talk about the electric utility industry's implementation of OASIS, or open-access, same-time information system, which is used to monitor and schedule electric transmission capacity.

It ended up with an earful about problems on the on-line system.

Gerry Cauley, of the industry's volunteer "How Working Group," said, "Overall, the OASIS does provide comparable access," and the system is seeing reservation activity at expected levels.

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.

John Quain, chair of the Pennsylvania Public Utility Commission, who helped draft legislation to introduce electric competition in his state, predicts that natural gas deregulation is next on the agenda.

In fact, the Gas Customer Choice Act was pending in the House and Senate in the Pennsylvania Legislature.

Speaking at the American Gas Association's Natural Gas Roundtable on July 16 in Washington, D.C., Quain predicted a customer choice bill would be signed either this calendar year or early in 1998.

Standard & Poor's has revised its business profile scale for public power agencies to give investors more details to figure out each rated utility's ability to compete in a deregulated market.

It expanded its five-point scale to a 10-point scale, similar to the rating system used for investor-owned utilities. A "1" rating is the "most capable of competing," so that investors can better gauge a public power's ability to meet competitive challenges and market developments, such as separation of generation and transmission facilities.

Having approved a performance-based ratemaking mechanism for Southern California Gas Co., the California Public Utilities Commission is free to rule on the merger of Pacific Enterprises (parent company of SoCal Gas) and Enova Corp., which owns San Diego Gas and Electric Co.

The PBR should reduce annual revenues by $160 million. If earnings exceed the authorized 9.49-percent rate of return, then a portion will be returned to customers.

The PBR is effective for five years.

WPS Resources Corp. and Upper Peninsula Energy Corp., which have a history of working together on power sales and emergency dispatch, are merging.

WPS Resources Corp.'s main subsidiary, Wisconsin Public Service Corp., is an electric and gas utility serving 400,000 customers. Upper Peninsula Energy Corp.'s main subsidiary, Upper Peninsula Power Co., has 48,000 electric customers.

The acquisition is structured as a stock swap valued at $71.4 million. Holders of Upper Peninsula common stock will receive 0.90 shares of WPS stock for each share held.

Duff & Phelps Credit Rating Co.

Central and South West Corp. has settled its pending litigation with El Paso Electric Co., resolving issues surrounding the 1993 termination of their proposed merger.

Central and South West will pay El Paso Electric $35 million, while both utilities have agreed to release all future claims against each other. In April, a bankruptcy judge ruled that Central and South West owed El Paso Electric a $25-million merger termination fee under their agreement, and said Central and South West also might owe an additional $18 million in interest.