New England Electric System

Courts

NITROGEN-OXIDE EMISSION LIMITS. Denying an appeal by electric utilities and industry groups against rules proposed by the U.S. Environmental Protection Agency for emission limits for nitrogen oxides at certain electric utility boilers, a federal appeals court has ruled that EPA properly interpreted the Clean Air Act. The act allows EPA to set NOx limits for certain electric utility boilers if it could show that more effective technology for low-NOx burners was available, the court said.

USGEN IS THE NATURAL CANDIDATE TO PURCHASE NEES' generation assets. We have a well-established commitment to the region; we have strong power plant operating experience; and we have been a leader in promoting competition and customer choice in gas and electric industries."

(em USGen President and CEO Joseph P. Kearney

In August 1997, U.S. Generating Co., an affiliate of PG&E Corp., successfully bid $1.59 billion in a competitive auction for all of New England Electric System's non-nuclear generating business (18 power plants, plus power purchase contracts and other assets).

THE POWER PLANTS OF AT LEAST FIVE UTILITIES IN NEW England and California get swapped this year for more than $5.3 billion. And happily, those holding bonds on the plants will be given cash for their coupons.

These utilities (see sidebar, "Going Once, Going Twice¼ Sold!") can expect their credit ratings to remain firm or even jump (em although that's debated by analysts. Such improved ratings may surprise market observers led to believe that loss of utility collateral would hurt investment grades.

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.

New England Power Co. has agreed with 17 parties, including government agencies and conservation groups, on the relicensing of the Fifteen Mile Falls hydroelectric project on the Connecticut River.

New England Electric System President and CEO John W. Rowe, Gov. Howard Dean (D-Vermont) and Gov. Jeanne Shaheen (D-N.H.) signed the agreement.

The agreement governs requirements for a new, 40-year license for Fifteen Mile Falls, the largest conventional hydroelectric project in New England.

The board of the California ISO selected Jeffrey D. Tranen as its first CEO. Tranen is former president of the New England Power Co., senior v.p. of the New England Electric System and chair of NEPOOL. The ISO starts operation Jan. 1, 1998.

Charles F. Gay, Ph.D., former director of the DOE's National Renewable Energy Laboratory, was hired as president and CEO of ASE Americas Inc. Klaus Albrecht, former president and CEO, will serve on ASE's board and as senior v.p.-business development.

(And why power plant buyers may follow suit.)

"WINNERS' CURSE" IS IMPORTANT TO THE UTILITY ASSET AUCTIONS. Winners' Curse is the tendency for the "rookies" and the wide-eyed visionaries to overbid in auctions with uncertain valuations.

The spectrum auctions at the Federal Communications Commission reveal the Winners' Curse even in the more "successful" rounds, despite the agency's elaborate precautions.

FCC's 14 spectrum auctions booked almost $23 billion in license fees (em almost $10 billion in broadband personal communications services (PCS).

New England Electric System has selected 12 companies from the U.S. and Europe to take part in an auction to supply electricity to Massachusetts and Rhode Island "standard offer" customers when retail competition begins.

Standard-offer service is set at seven years in Massachusetts and 12 years in Rhode Island. When competition begins, slated for Jan. 1, 1998 in both states, consumers can choose a new energy supplier through the standard offer.

In aiming to make financial statements more meaningful, will FASB instead make them indecipherable?

By mid-summer, a total of 123 companies had cranked out some 574 pages of comments, detailing exactly what they thought of the accounting rules proposed by the Financial Accounting Standards Board to cover the closure or removal of certain long-lived assets. %n1%n The FASB's"Exposure Draft," issued early last year, had requested comments on eight issues. The respondents answered as requested, but also raised a host of new questions.