Federal Energy Regulatory Commission

USE OF U.S. ECONOMY UPHELD FOR EQUITY CALCULATIONS

The Federal Energy Regulatory Commission, in seven rate cases involving interstate natural gas pipelines, has upheld a new policy on the appropriate long-term growth rate to be used in computing their return on equity. Five of the pipelines contested FERC's new policy, as announced in Opinion 396-b.

The Commission defended the rate-setting method, but decided to allow the pipelines a chance to prove why the rules should not apply to them. The contesting pipelines are: Trailblazer Pipeline Co. (Docket No.

EVERYONE'S GOT AN OPINION ABOUT MARKETING affiliates. In the natural gas industry, a fierce debate has emerged, as rules are proposed to govern the relationship between utility and affiliate.

Affiliate transactions are already among the most regulated activities in the gas industry. According to the 1995-96 Compilation of Utility Regulatory Policy produced by the National Association of Regulatory Utility Commissioners, every state, except Nebraska, has jurisdiction over affiliate transactions involving a private- or investor-owned gas utility.

PITTSBURGH CHALLENGES MERGER; ALLEGES COLLUSION

The city of Pittsburgh has filed an antitrust lawsuit against Allegheny Power Systems Inc., and Duquesne Light Co., to stop the merger proposed by the two companies.

In its Sept. 29 court filing, Pittsburgh claimed the two utilities acted jointly to restrain trade. The city said the companies did this by agreeing to maintain higher rates for electric retail service at two industrial sites targeted for redevelopment zones pending their merger.

NEW England Power, a subsidiary of New England Electric System, promoted Lawrence E. Bailey to president. Previously, Bailey served as vice president and director of generation operations.

Former Deputy Secretary of Energy, Charles B. Curtis, joined Hogan and Hartson as the director of its energy group. Susan Tomasky, former General Counsel of the Federal Energy Regulatory Commission, accepted a position with Hogan and Hartson's energy group.

QUESTION: WHAT DO JOHN ANDERSON (ELCON),

Karl Stahlkopf (EPRI) and Matthew Holden (former commissioner at the FERC) have in common that may affect the course of electric restructuring?

Answer: Each belongs to Phil Sharp's task force on electric system reliability, and each embodies a different set of needs and aspirations, making it quite unlikely that we'll see agreement any time soon on what Congress or the Clinton Administration should do to reform the system.

Former Energy Secretary Hazel O'Leary announced the Task Force on Electric System Reliability last year.

AS U.S. ELECTRICITY MARKETS BECOME increasingly competitive, large industrial customers will discover many new choices. These choices include the opportunity to modify the amount and timing of electricity use in response to prices that vary from hour to hour. In addition, customers can sell certain electricity services, including operating reserves and load following, to the system operator. And industrial customers with cogeneration facilities can participate fully in bulk power markets, buying and selling energy and ancillary services in response to changes in spot prices.

BY WHAT AUTHORITY CAN STATES FAVOR RENEWABLE

energy in a restructured electricity market?

Renewable resource funding marks a major point of contention in utility deregulation. Environmental groups fear that without some form of compulsion or subsidy, or both, renewable resources will not survive in an energy economy based on least direct consumer cost. However, utilities do not want to be saddled alone with the chore of carrying all renewables to market.

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.

Connecticut's Department of Public Utility Control and Attorney General Richard Blumenthal alleged gross mismanagement of the 582-megawatt Connecticut Yankee nuclear plant in charges filed at the Federal Energy Regulatory Commission. Northeast Utilities owns 49 percent of the facility.

The plant has been shut since December 1996 and is being dismantled. The filing claimed the utility lost control of contamination and created an undocumented nuclear waste dump.

A MASSIVE, WORLD WAR I-era building in downtown Baltimore houses Constellation Power Source, an unregulated, wholly owned power-marketing subsidiary of Baltimore Gas and Electric Co. Upon introducing the new company in February, BG&E announced that Goldman Sachs would serve as "exclusive advisor" for the start-up.

Later, when asked to clarify the relationship between the two companies, Charles W.