Federal Energy Regulatory Commission

The merger of Baltimore Gas and Electric Co. and the Potomac Electric Power Co. will not harm consumers by restraining competition in the electric market, according to the Maryland Public Service Commission.

The commission approved the merger provided Baltimore Gas and Electric lowers its customers' electric rates by $43.876 million and PEPCO lowers its Maryland customers' rates by $12.101 million. The competitive effect of the merger was still under examination at the federal level.

Dominion Resources touts its "impacted" method, but opponents call it a "stalking horse" (em a scheme to avoid full review at FERC.

Is the Federal Energy Regulatory Commission prepared to accept true marginal-cost pricing for electric transmission?

With all the criticism leveled at the traditional "contract path," one would think that the FERC would consider a new approach to transmission pricing.

In fact, last year in its final Order No.

Moody's Investors Service has released a report that finds the most significant long-term implication of Order 888 for investors is for potential divestiture of transmission assets by investor-owned utilities.

The Moody's study, FERC Order 888 and Wholesale Competition: Catalyst for a New Market Model, also finds that divestiture by a vertically integrated utility may leave bondholders secured by a lien on relatively risky generating assets of often questionable market value, as opposed to the presently more diverse and balanced asset portfolio.

Senate Energy and Natural Resources Committee Chair Frank H. Murkowski (R-Alaska) has written a letter to Treasury Secretary Robert E. Rubin regarding regulation changes the Internal Revenue Service is considering, which would allow publicly owned utilities to expand use of tax-exempt bonds to compete against privately owned utilities.

Murkowski asked the IRS not to issue new regulations giving publicly owned utilities a "special competitive advantage" by allowing the companies to issue tax-exempt bonds.

The Federal Energy Regulatory Commission has approved three orders that together clarify the Commission's jurisdiction over corporate realignments.

The FERC found on April 30, that while it does not have jurisdiction over mergers of public utility holding companies, it does have jurisdiction over transfers of control (dispositions) of public utility facilities.

Corporations will need FERC approval for a merger simply because they own paper assets that qualify as utility property.

In three companion orders issued April 30, 1997, the Federal Energy Regulatory Commission tried to stake out new jurisdictional turf. It attempted to expand its jurisdiction under section 203 of the Federal Power Act to cover "convergent" mergers and reorganizations involving electric utility holding companies and power marketers.

The North Carolina Utilities Commission has approved the proposed $7.7-billion merger of Duke Power Co. and Houston-based PanEnergy Corp. to form Duke Energy Corp., subject to conditions designed to protect North Carolina ratepayers from potential adverse effects.

The commission said the merger must ensure that ratepayers of the new company receive no fewer benefits than ratepayers in other jurisdictions.

Authors lost their case. The bright line is preserved.

Unfortunately, PUBLIC UTILITIES FORTNIGHTLY did not caution its readers that a recent article ("Gas Pipelines and the Hinshaw Amendment: Conflicts Loom as the 'Bright Line' Fades Between Federal and State Jurisdiction," April 1, 1997, p. 36) is actually a thinly disguised brief for claims that a series of tribunals has rejected, including the U.S. Supreme Court. A warning from the editors would have saved valuable time for readers searching for more substantive coverage of the utility industry.

"People are starting to talk about ISOs on the gas side." So says Jerry Pfeffer, lay advisor on energy industries for Skadden, Arps, Meagher & Flom, the New York law firm well known for its work in mergers and acquisitions.

Pfeffer's comment alludes to events now unfolding in Southern California, that fount of fashion, where each round of "deregulation" only doubles the ante in billable hours. This time it's natural gas pipelines. Do they have market power too?

"It Would Not Surprise Me"

Southern California Edison Co. has now alleged that Southern California Gas Co.

The Missouri Public Service Commission has approved the merger of Union Electric Co. and CIPSCO Inc., if Union Electric meets certain requirements, such as helping to form an independent system operator for the region's transmission system.

The formation of the ISO must be consistent with guidelines established by the Federal Energy Regulatory Commission. The proposed merger will include the formation of a new entity, Ameren Corp., as a federally regulated public utility holding company.

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