American Electric Power

DURING THE WEEK OF June 22 there was a major imbalance between supply and demand for electricity in the Midwest. Although demand was high enough to set a few records, the real problem may have been the lack of supply. Many generators were out of service and a few marketers reneged on contracts to deliver power. Market prices for bulk power allegedly soared as high as $4,000 per megawatt-hour. The industry was left in an uproar over these volatile prices, especially since a competitive market has been touted as a means to achieve lower prices, not higher ones.

FERC

MIDWEST POWER PRICES. Federal Energy Regulatory Commission Chairman James Hoecker announced July 15 that as soon as the staff presents its findings, the FERC will deal with the complaints filed by Cinergy, Steel Dynamics Inc., and others asking for regulatory relief from the late June run-up in Midwest bulk power prices (as high as $7,500 per megawatt-hour), and for a price cap set at $100/MWh. Nevertheless, Hoecker advised that the FERC was in "no hurry," and that the remedies available to it were not entirely clear. Docket No. EL98-53 (Cinergy), filed June 29, 1998; Docket No.

IT TAKES LABOR, FUEL, OPERATING CASH AND INVESTMENT capital to produce and deliver electric power. Which utilities have managed to use these resources optimally to produce and sell kilowatt-hours? How do these utilities compare with each other? Is there room for improvement?

And what about financial success? Does efficiency, as measured by a ratio of inputs to outputs, serve as a reliable predictor of market-to-book ratios or merger premiums?

Some of these questions are answerable; others not.

Courts

ENERGY SUPPORT SERVICES. An Illinois appeals court affirmed a 1997 decision by the state commission that had denied authority to Commonwealth Edison to offer "energy support services," such as design, engineering, construction, analysis and management of electrical power equipment and energy systems. The court made this decision despite the utility's argument that no evidence existed to support the commission's finding that ComEd enjoyed a monopolist's advantage over competitors.

MICHIGAN CHOICE APPEAL. Michigan Attorney General Frank Kelley filed an appeal in the Michigan Court of Appeals of the Michigan PSC's Jan. 14 rehearing order (News Digest, March 15, 1998, p. 18) adopting a phase-in schedule for electric restructuring and retail choice for Consumers Energy and Detroit Edison. Kelley alleged that the order fails to create a competitive generation market or foster lower rates. He called it an "outrage," that gave the utilities everything they wanted. Case Nos. u-11290 et al., Feb. 13, 1998 (Mich.P.S.C.).

NEW HAMPSHIRE RESTRUCTURING. The U.S.

Federal Agencies

ELECTRIC RETAIL PRICES. The Energy Information Administration has released a new report finding that the average retail price of electricity has declined for the third year in a row and remained stable for the first nine months of 1997. According to Electric Sales and Revenue 1996, average residential electric prices declined slightly in 1996, the first drop for that consumer class since the EIA began collecting data in 1984.

PG&E Corp. promoted G. Brent Stanley to senior vice president of human resources and Greg S. Pruett to vice president of corporate communications.

CalEnergy Co. Inc. announced that J. Douglas Divine will serve as vice president of project development for CalEnergy Americas. Divine will be responsible for managing the business development activities throughout the Americas Region.

James M. Stephens was named president of Providence-Southern LLC. Prior to joining Providence-Southern, Stephens was assistant vice president of Reed Consulting Group. Stephens replaces Caroline K.

THE COALITION OF utilities calling to "Repeal PUHCA Now!" has pulled together a first-class team of lobbyists. They have been working intensely on Capitol Hill for more than two years. But they haven't won the easy victory they thought was within their grasp when the Republicans took over the Congress in 1994. The major flaw in the coalition's approach is classic: The pro-repeal lobbyists have been tireless talkers, but poor listeners.

POWER PLANT SALE. Central Maine Power Co. has agreed to

sell its hydroelectric, fossil and biomass power plants totaling 1,185-MW of generating capacity to FPL Group, the holding company of Florida Power and Light. The sale price of $846 million exceeds book value and could permit up to a 10-percent rate cut for customers by the end of the year.

OHIO/TEXAS DEAL. Ohio-based American Electric Power

Co. and Texas-based Central and South West Corp. on Dec.

THE former chairman of the Missouri Public Service Commission, Karl Zobrist, is now a partner at Blackwell Sanders Matheny Weary & Lombardi LLP.

Zobrist resigned from the commission on Aug. 15, 1997.

Robert C. Kelly, former chairman and CEO of Enron Renewable Energy Corp., was named managing director of renewable energy for Enron International.

Steven J. Lewis joined AEP Energy Services Inc. as senior vice president of energy services. Previously, Lewis managed trading of natural gas and electricity for Duke/Louis Dreyfus LLC.

Michael P.