U.S. Supreme Court

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.

THE FERC TAKES SUGGESTIONS ON THE FUTURE OF THE GAS INDUSTRY.

Earlier this year, the Federal Energy Regulatory Commission opened a discussion of issues facing the natural gas industry. Its aim? To set "regulatory goals and priorities" for the era following from Order 636, issued in 1992. %n1%n

To gather input, the FERC scheduled a two-day public conference. It asked for comments on a myriad of topics, ranging from cost-of-service rates to hourly gas pricing and services.

In union circles, they call it "burial insurance." That apt phrase denotes the severance, early retirement and re-training packages negotiated for veteran utility workers sideswiped by a changing market.

So far, labor has won some insurance: through legislation in California and in Maine; through a commission order in Massachusetts; and a pending settlement agreement in New York City, prompted by a commission order.

Labor lost hard in Pennsylvania and in Rhode Island, however. Worker protections weren't built into restructuring decisions in those states.

Uncle Sam buys a lot of power. Who supplies it may depend upon Article I, Sec. 8, Clause 17.

Today's intense competition to sell power should not overlook one large customer - the federal government. The Department of Defense alone consumed $1.4 billion worth of power in fiscal year 1994. Recently, one utility executive was quoted as saying: "We've got power marketers foaming at the mouth for DOD's business."%n1%n

Yet how does a marketer get the business of a federal agency, office or installation if retail wheeling is not mandated?

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.

A recent conversation:

"When was the demise of the regulatory bargain? What you say is true, but at some point you had to know the bargain was over."

(em A state utility commissioner

"Beats me, it doesn't seem to be over yet. The electric industry still has a duty to serve all customers, and it must charge below-market rate confiscatory for many of our services because of the regulatory bargain.

Touted as a panacea for stranded costs, securitization would forever shield rates from market scrutiny.

We consumers display an amazing talent to squander the fruits of our labor on the whim of the moment. Examples might include bungee jumping, vanity license plates or pet rocks. Or just about anything you might find in a magazine stuffed in the back of an airline seat.

Now make way for electric utility restructuring, where the latest fashion calls for securitization of uneconomic costs.

S&Ls won damages when the feds reneged on promises. Utilities could do the same.

It's tough to be a utility CFO these days. For decades, electric utilities have served both as target and conscripted agent of government policy. Utilities pay disproportionately high taxes. Utility rate structures further distort market forces with subsidies flowing from business to residential. These policies actually defeat market forces. To large measure, many of these market failures arise from reconciling the hangover from uneconomic policy initiatives.

PUC endorses direct access, plant divestiture and limits on recovery of stranded costs. Says order will not interfere with 1990 bankruptcy plan for Northeast Utilities. The New Hampshire Public Utilities Commission has issued its final plan for restructuring the state's electric industry, at the same time announcing what is believed to be the first formal policy decision by a state utility commission that would deny full recovery of costs left "stranded" by the transition to competition.

Released on Feb.

The U.S. Supreme Court in late February ruled that it is constitutional for Ohio to impose a 5-percent use tax on purchases of natural gas from an out-of-state natural gas marketer, when the same purchases would have been exempt from tax had the purchaser bought the gas from an in-state local distribution company.

Nicholas Bush, Natural Gas Supply Association president, expressed disappointment with the decision and called it a setback for development of a national, competitive natural gas marketplace.