Wisconsin Electric Power

Appearing as tree huggers, utilities draw skeptical reaction from environmentalists.

At first glance, it looks like the same old story: Environmentalists versus utilities. But this time, the utilities are the ones fighting for the forests (em with a twist.

Utilities, major producers of carbon dioxide, believe they've found a cost-effective way to offset emissions through carbon sequestration, or sinks, which means converting pastures to forests or maintaining old-growth groves.

But environmentalists call it an easy way out.

Marking the second time it had approved a union between an electric utility and a natural gas pipeline company since issuance of its December 1996 merger policy, the Federal Energy Regulatory Commission has approved the merger of Duke Power Co. with PanEnergy Corp.

In its 21-page order issued May 28, the FERC found the merger consistent with the public interest based on an examination of the effect it would have on rates, competition and regulation (Docket No. EC97-13-000).

The proposed merger of Northern States Power Co. and Wisconsin Energy Corp. to form Primergy has been called off because of delays by regulatory authorities at both the federal and state levels.

"After thorough consideration, we have mutually agreed to terminate our plans," said Richard A. Abdoo, Wisconsin Energy chair, president and CEO.

In a series of rulings regarding Wisconsin Electric Power Co.,

the Wisconsin Public Service Commission has directed the

utility to reduce electric charges and natural gas service rates.

In a similar ruling, the commission also has authorized Wisconsin Public Service Corp. to boost rates for natural gas, while trimming rates for electric service.

Wisconsin Electric. The commission ordered Wisconsin Electric to cut electric rates by $7.383 million. Rate of return on common equity was set at 10.8 percent.

Wisconsin Electric Power Co., outbid about 60 companies to supply electricity to Chicago's Public Housing Authority, now served by Commonwealth Edison Co., which says it will refuse wheeling services. The housing authority says the deal with WEP would allow it to shave about $5 million off its $10-million, annual CE electric bill. The authority currently pays CE roughly 7.2 cents per kilowatt-hour, but would pay less than 3 cents per kWh to WEP, excluding wheeling charges. The dispute may well end up before the Federal Energy Regulatory Commission.

I was amused by your "Headlines" item on the Reason Foundation's study calling for privatization of TVA and the power marketing administrations due to government subsidization and poor management (May 15, 1996, p. 16). If those were the two overriding issues, one could argue in favor of swapping segments and doing something different with the segment that costs the government the most.

At the end of May, Consumers Power Co. issued a press release that caught my eye. In four short paragraphs, the company said it had filed an application with the state public service commission (PSC) seeking approval of a private power-supply contract with James River Corp. Consumers Power ranks James River as its 23rd largest industrial electric customer.

Sound bites from state and federal regulators.

Primergy Merger. Michigan regulators have OK'd the merger between Wisconsin Electric Power Co. and Northern States Power Co. The settlement assumes about 2 percent in cost savings on combined Michigan revenues, and imposes a four-year moratorium on rate hikes. Case No. U-10913, April 10, 1996 (Mich.P.S.C.).

Gas Pipeline Certification. Michigan certifies Thunder Bay Pipeline Co., L.L.C.

On behalf of our members, we want to express our continuing appreciation for the leadership you and your colleagues are showing in seeking enactment of S. 1317, a bill to repeal the Public Utility Holding Company Act of 1935, while assuring appropriate consumer and investor protection. As you know, the '35 Act imposes duplicative, unnecessary, and burdensome requirements that are outdated and do not reflect current circumstances in the gas and electric utility industry.

A few weeks ago I picked up a copy of one of those law firm newsletters, this one published quarterly by Reid & Priest, titled the Utility Telecommunications Advisor.