PPA

STATE PUCS

Distributed Generation. In December and January the Illinois commission took comments from utilities, marketers, manufacturers, and trade and advocacy groups on how to develop policy on distributed generation.

* Rulemaking Strategy. Enron has urged the state to proceed in a fashion similar to the California PUC's

two-track investigation. It asked for two separate rulemakings on (1) interconnection standards for DG installations of 50 megawatts or less, and (2) rate design and operational issues.

* Unit Size Limits.

How 165 lawyers were mostly on the wrong side in the biggest electric merger to date.

With Warren Buffet buying up MidAmerican Energy as his own personal utility, and Bill Gates taking a stake in Avista, the standard electric merger starts to look tame.

For that and other reasons, I believe it's all but certain that the Federal Energy Regulatory Commission will soon OK the electric industry's biggest-ever merger, combining American Electric Power Co. with Central and South West Corp.

They see utilities responding, but fear outlying areas are overlooked.

Despite reports of year 2000-readiness from virtually all electric utilities, and a promise from the U.S. Department of Energy to pressure the laggards, some customers still fear being left in the dark on Jan. 1, 2000. That view may surprise some, but it emerged clearly from the conference held in Chicago August 5-6 by the North American Electric Reliability Council, to update utilities and their customers on electric industry progress in Y2K problem mitigation.

As utility takeovers break new ground, the FERC ponders proposed rules, perhaps already out of date.

A year ago, when U.S. Antitrust Czar Joel Klein talked of a "window of opportunity" for electric utility mergers, he didn't predict when it would close.

And it hasn't yet.

In the 12 months leading up to January 1998, when Klein had addressed the Federal Energy Regulatory Commission through its "Distinguished Speakers" series, only the ill-timed Primergy deal had been turned down. The next year, 1998, would prove no different.

Shaky merger policy finds the FERC at war with itself.

"IN HIS DELIGHTFUL ARTICLE, "THE FOLKLORE OF Deregulation," published this summer in the Yale Journal on Regulation, federal judge Richard Cudahy notes the ethereal nature of "virtual electricity." This new product, he explains,"exists only as a blip on a computer screen and will never give one a shock." "Reality," he notes, has "retreated to the money part of the system."

We could use a dose of that reality in looking at electric utility mergers.

THE OLD ADAGE ABOUT INNOVATION STILL HOLDS TRUE: "You can tell the pioneers by the arrows in their backs." More than 70 municipal utilities have either built or plan to build telecommunications systems with fiber-optic and coaxial cable to compete against local cable television, data communications or telephony providers. Profitability for these ventures has been abysmal, but their customers and regulators are happy. Now large, investor-owned electric utilities are stumbling down the same trail marked with cast-off bandages of these early pioneers.

PERRY BAKER was appointed public information officer for the Arizona Corporation Commission. Baker is a former public information officer for both the city of Phoenix and Maricopa County.

The American Public Power Association named Walter R. McGrath president at its annual conference. McGrath, general manager of the Baintree Electric Light Department, served as APPA's president-elect during the past year and as vice president from 1996 to 1997.

William Irby was named director of the communications division at the Virginia State Corporation Commission. He succeeds Edward C.

LAST NOVEMBER, Energy Secretary Federico Peña asked the DOE

to study what to recommend about the Tennessee Valley Association in drafting proposed legislation on electric restructuring for the Clinton Administration. He referred the project to a committee of the Secretary of Energy Advisory Board, led by former South Carolina Congressman Butler Derrick.

The committee issued its report on March 31. The DOE had already released its legislative guidelines on March 25, six days earlier.

PIPELINE CONSTRUCTION. Chief Judge D. Brock Hornby of the U.S. District Court in Maine, decided to allow Portland Natural Gas Transmission System access to electric transmission corridors owned by Central Maine Power Co. The access will be used to install a natural gas pipeline.

Portland received FERC approval Sept. 24 for installing and operating a 292-mile, $302-million interstate pipeline. CMP owns about 70 miles of the electric transmission corridor. The preliminary injunction, issued April 10, gives Portland access to property on CMP-owned transmission corridors.

EARLIER IN THIS DECADE, FERC CHAIRMAN MARTIN ALLDAY delivered his famous quote: "Everybody is somebody's native load customer."

Today, that truism has fallen under attack. It could go out the window if power marketers get their wish. One group of marketers has asked the Federal Energy Regulatory Commission to open a new rulemaking on electric system reliability. This group proposes to end the notion of transmission responding to load.