Southern California Edison

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.

Federal Agencies

Nuclear Plant Fines. The Nuclear Regulatory Commis-

sion has proposed fines totaling $2.1 million against Northeast Nuclear Energy Co. for many violations at the company's Millstone nuclear plant in Waterford, Conn. The fine marks the largest civil penalty ever proposed by the NRC. Northeast Utilities said it will pay the fine, which it called "a necessary and important step toward bringing to closure a very disappointing and difficult chapter in the company's history." The utility said it will not pass the cost onto ratepayers.

Electric Futures.

CONSUMER FRAUD. The National Association of Attorneys

General, meeting Nov. 18 in Washington, D.C., to discuss electric restructuring, issued a warning to electric consumers on fraudulent schemes and abusive practices by scam artists. The warning encourages consumers to check their electric bills for unusual provider names or charges, and to avoid participating in contests that require a signature that can be used to switch an account.

RATE REDUCTION BONDS.

IN THE EARLY 1970s, WHEN THE "ENERGY CRISIS" DAWNED, New York told electric utilities to stop advertising to promote electric use. State judges deemed such promotion as lacking in "any beneficial content," or even "detrimental to society." It took an appeal to the U.S. Supreme Court for utilities to win the right to tout their product.

Today's questions target the bottom line: Can advertising boost sales for energy suppliers? If so, what does it take?

WHAT IS A SCHEDULING COORDINATOR?

At least 33 organizations know the answer to that question in California because by late last year that's how many SCs had filed to act as go-betweens to the independent system operator.

Although the definition varies depending on who's asked, an SC is simply a preschedule and dispatch office. An SC puts a power schedule together for itself or for energy service providers a day ahead or hour ahead.

WHETHER YOU CALL IT "DEREGULATION" OR "re-regulation," the promised move to competition does not mean less regulation - at least not any time soon.

WHEN THE CALIFORNIA PUBLIC UTILITIES COMMISSION approved a price-cap plan for Southern California Edison's distribution operations, it lamented the lack of a "distribution-only" study on productivity. So we prepared one.

Unlike electricity generation, electricity distribution will remain a regulated business. But the form of regulation likely will change to price caps, mirroring events in telecommunications regulation here and energy regulation abroad.

With price caps, rates are reviewed formally only at set intervals.

WITH DIRECT ACCESS SCHEDULED TO BEGIN ON Jan. 1, 1998, California regulators are moving quickly to set up their long-considered policies on electric restructuring. The restructuring actions touch nearly every aspect of electric regulation in the state from financing decisions and rate design to the sale of generating assets and monitoring new capital additions.

In addition, restructuring has affected ongoing regulatory activities such as the development of performance-based rate making plans and pricing and rate designs for large incumbent utilities.

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.