Fortnightly
News Digest
September 01, 1999
State PUCs
Seasonal Shopping Credits. State regulators denied a bid by New York State Electric & Gas Corp. to "shape" its electric shopping credit so it would rise and fall with changes in prices and consumption. NYSEG proposed a credit running from 3.09 cents (spring) to 5.65 cents per kilowatt-hour (summer), averaged over the year at 3.71 cents per kilowatt-hour.
NYSEG said the shaped credit would prevent "gaming" by customers who might turn to other suppliers during low-cost months, when a high fixed credit would reward switching, but then return to the utility during peak periods, when prices would exceed a fixed credit. But the PSC ruled that its customer switching guidelines would "vitiate" concerns about churning by customers. Case 96-E-0891, Opinion 99-7, July 15, 1999 (N.Y.P.S.C.).
Shopping Credits. The New Jersey board approved an average distribution rate for Atlantic City Electric Co. of 2.1384 cents per kilowatt-hour, with a residential supply shopping credit rising ratably from 5.65 cents per kilowatt-hour in 1999 to 5.85 cents by 2003. BPU Docket Nos. E097070455, et al., July 15, 1999 (N.J.B.P.U.).
Standard Offer Service. State regulators OK'd a proposal by Connecticut Light & Power Co. to procure 50 percent of generation supply for its bundled standard offer service (SOS) through competitive bidding, and 50 percent as a backstop through its affiliate, Select Energy, while selling energy and capacity from its own plants into the wholesale market. (SOS is exempt from the mandatory renewable energy portfolio.) Docket No. 99-03-36, July 7, 1999 (Conn.D.P.U.C.).
Electronic Data Interchange. The New York PSC was to receive comments by Aug. 13 on a June 30 report detailing progress since October 1998 by five EDI subgroups (enrollment, billing, gas operations, administrative business processes, data transfer mechanisms) toward achieving seamless electronic transfers between utilities, marketers and energy service companies. The groups say they'll have EDI in place on or about next April for the advent of New York's retail access market. Case 98-M-0667 (N.Y.P.S.C.).
Customer Billing. The New York PSC was to take comments by Aug. 10 on staff proposals to introduce alternative energy billing options, involving separate or combined bills issued by utilities and/or suppliers, plus a so-called "single retailer model" (favored by many marketers and some utilities), with utility delivery charges rolled into the supplier's single bill but not stated separately. Case 99-M-0631 (N.Y.P.S.C.).
Net Metering. North Carolina has set hearings for Sept. 21 on a net metering rule proposed by the N.C. Solar Energy Association. The rule would apply to on-site generation not larger than 100 kilowatts (for commercial or industrial applications) or 10 kW (for residential), using photovoltaic, wind, biomass, micro-hydro or solar thermal resources, but only up to a statewide limit of 0.2 percent of the state's adjusted 1998 peak load forecast. Docket No. E-100, Sub 83, July 8, 1999 (N.C.U.C.).
Retail Electric Competition. Preparing for supplier choice in electricity, the Maine PUC OK'd rules on (1) standard offers, (2) consumer disclosures, (3) renewable portfolios, (4) generation asset divestiture, and (5) standards of conduct for utility marketing affiliates.
• Standard Offers. Initial term set at one year. Suppliers must bid separately by customer class to win service rights. Nonresidential customers generally must pay an opt-out charge if they switch from competitive to SO service and back to competitive service within 12 months. Docket No. 98-576, June 29, 1999 (Me.P.U.C.).
• Consumer Disclosure. Product offerings must post an information label describing average unit energy prices in various formats, plus information on fuel mix and emissions (CO2, NOx and SO2), reflecting either "known resources" (if the supplier holds entitlements to specific plants) or the residual system mix for the applicable control area (usually ISO-New England). Imports would take on the ISO-NE attributes. Docket No. 98-703, June 29, 1999 (Me.P.U.C.).
• Renewable Portfolio. Eligible resources include qualifying cogeneration and small power production facilities, plus fuel cells, tidal power, solar, wind, geothermal, hydro, and fuels taken from biomass or recycled municipal waste. Pumped storage must use renewable fuels for pumping. To qualify for the portfolio, a resource must be physically delivered to the ISO-NE or Maritimes control area. Docket No. 98-619, June 29, 1999 (Me.P.U.C.).
• Generation Divestiture. First round of bids from plant buyers due Oct. 1; utilities to select winners by Nov. 1; PUC to approve contracts by Dec. 1. Buyers to have no recourse against utility if purchased asset does not produce expected amount of energy or capacity. Docket No. 98-824, June 29, 1999 (Me.P.U.C.).
• Utility Affiliates. No utility marketing affiliate may sell more than 33 percent of total kilowatt-hours sold at retail with service territory of affiliated transmission and distribution utility, nor more than 20 percent of utility's standard offer service. No joint advertising or marketing activities. T&D employees must be located in separate building from marketing affiliate. Docket No. 98-457, June 29, 1999 (Me.P.U.C.).
Default Electric Service. Massachusetts regulators took comments in late July on how to calculate an average market price of electricity in setting a default tariff for each electric distribution utility. Regulators asked utilities whether they should rely on retail or wholesale prices, or historic or projected data. Also, should the price vary with the market over the course of a month; should it reflect retail distribution costs? D.T.E. 99-60 (Mass.D.T.E.).
Customer Billing. Connecticut OK'd final rules on a standard electricity billing format, requiring separate identification of generation, distribution, public purpose and competitive transition charges, and making suppliers solely responsible for collecting their unpaid energy balances due from departing customers. Docket 98-08-16, June 18, 1999 (Conn.D.P.U.C.).
Demand-side Management. New Jersey asked the state's investor-owned electric and gas utilities to file proposals by Aug. 23 on how to revamp funding and programs for demand-side management under the state's electric restructuring law, which maintains DSM funding at no less than 50 percent of levels in force when the law was enacted.
The board invited ideas on how to remake DSM and renewable energy goals under retail energy competition - how to structure a trust fund, integrate state and federal funding, and allocate funds between sectors (electric vs. gas) and among customer classes (industrial commercial, industrial, and residential uses), etc. It also asked how to integrate market forces into programs, and whether it should create an "independent statewide administrator" for DSM and renewable energy. Docket Nos. EX99050347, et al. June 17, 1999 (N.J.B.P.U.).
Retail Gas Unbundling. To help meet the Dec. 31 deadline for retail gas unbundling imposed by state law, New Jersey will create a working group to address issues such as customer enrollment, metering and billing, customer administration, nomination procedures and reliability. The board first will consider whether to impose a uniform process for electronic data interchange and whether to adopt EDI processes used by electric utilities. Docket No. GX99030121, June 16, 1999 (N.J.B.P.U.).
Customer Switching. The Pennsylvania PUC granted a partial waiver of a rule that had required competitive electric suppliers to notify distribution utilities (EDCs) of a customer's supplier selection within one day of the customer contact.
Instead, if a supplier signs a contract having a future effective date, it must notify the EDC of the customer's selection within one business day following the effective date of the selection.
The PUC granted the waiver because EDC information systems cannot process a supplier selection with a delayed effective date, but told EDCs to update their data systems "when practicable." Docket No. P-00991673, June 24, 1999 (Pa.P.U.C.).
Consumer Protection. Montana has issued rules to require both electric and natural gas customers to give written authorization before a supplier can switch accounts for them. Suppliers also must provide a service contract with a uniform information label to allow consumers to compare offers. Suppliers can terminate contracts for nonpayment after 14 days of giving written notice. On termination, service would continue uninterrupted from a default supplier. See www.psc.mt.gov/consumer.htm.
Gas/Electric Unbundling. The Minnesota PUC opened an investigation (Docket No. E,G- 999/CI-99-687) concerning the issues of unbundling and retail choice in both the natural gas and electric industries, instructing the Department of Public Service and stakeholders to develop a restructuring and unbundling plan to be ready for the 2001 legislature. Progress reports were due by Oct. 1, March 1 and Sept. 1, 2000.
At the urging of the state attorney general to seek out "other short-term means of capturing the benefits of a more competitive gas environment," the PUC also initiated a docket to investigate outsourcing of procurement of gas supply and transportation. Docket Nos. G-999/CI-99-687 (choice), G-999/CI-99-688 (outsourcing), May 21, 1999 (Minn.P.U.C.).
Y2K Moratorium. North Carolina issued a moratorium, to run from Nov. 1 to Feb. 1, 2000, barring any new regulatory action that could force telephone carriers to significantly alter their networks or information systems. Docket No. M-100, SUB 126, June 25, 1999 (N.C.U.C.).
Electric Rate Cuts. Central Maine Power Co. has asked the Maine PUC to allow it to cut its electric rates by an average of 10 percent starting in March - the first significant rate cut for the utility since the mid-1980s - made possible by CMP's sale of its hydroelectric and oil- and wood-fired power plants to Florida-based FPL Energy.
Small residential customers using less than 100 kWh per month could see cuts of between 11 percent and 35 percent, CMP said, plus the end of inverted rates that had charged three cents more per kilowatt-hour for use over 400 kWh per month.
Said CMP spokesman Mark Ishkanian, "This was contrary to customers' experience in buying other products - the more you buy, the lower the unit price."
Electric Reliability
New York City Outages. At a meeting held on July 14, the New York PSC opened an investigation of power outages that occurred on July 6 in certain areas of Con Ed's service territory, including Manhattan's Washington Heights and Cooper Square neighborhoods, and 8 percent voltage reductions suffered in the Williamsburg and Long Island City sections of Brooklyn and Queens.
At the same meeting, the PSC announced that it had proposed legislation to improve the state's process for siting major electric generating plants.
According to the PSC, the New York Power Pool posted a record peak load of 30,311 MW on July 6, breaking the previous market of 28,700 MW, set two years earlier, by more than 5 percent. Also setting record peaks were Central Hudson Gas & Electric, Con Ed, the Long Island Power Authority and Orange & Rockland.
New York PSC Chair Maureen O. Helmer said more investigation was needed to determine if ConEd's preparations were adequate and whether improvements were needed in operating, design and maintenance practices. "Frankly, given that record usage caused the utilities to dip into their generation operating reserves, New York state as a whole was fortunate to avoid further problems," Helmer observed. Case 99-E-0930, July 16, 1999 (N.Y.P.S.C.).
Mergers & Acquisitions
Eastern + Colonial. Massachusetts regulators OK'd the takeover of Colonial Gas Co. by Eastern Enterprises, New England's largest natural gas distributor, allowing a $199.2 million acquisition premium over a 40-year amortization period, but with an initial 10-year rate freeze, during which time Eastern may recover the premium only to the extent that merger benefits (net of the premium) exceed costs. Eastern would pay 2.66 times Colonial's book value and 22.1 times Colonial's then-latest 12-month earnings. Eastern also has announced an agreement to buy New Hampshire's EnergyNorth Inc. The combined company would serve over 800,000 natural gas customers in New England. D.T.E. 98-128, July 15, 1999 (Mass.D.T.E.).
ScottishPower + PacifiCorp. State PUC staffs in the Pacific Northwest helped pave the way for the planned merger between PacifiCorp and ScottishPower, as the Washington UTC staff recommended approval by the terms of a June 10 stipulation, and the Oregon PUC staff signed a settlement agreement on July 23 that would allow the deal subject to certain merger conditions. Earlier, in testimony filed July 14, the Oregon staff had said the merger could pose risks for PacifiCorp customers - risks not seen in the merger between Enron and Portland General Electric.
The settlement would credit $12 million per year (for three years) to Oregon ratepayers, plus $15 million in the fourth year. But the parties can reduce the credits by demonstrating that savings produced through the merger have been reflected in rates. Hearings were set for July 28-30.
The Oregon staff had wanted the credit because it thought the merger might drive rates higher for distribution or customer service functions. By contrast, it said the Enron/PGE deal had not posed such risk, but in fact had implied benefits by offering direct access to PGE customers and rolling PGE's wholesale business into Enron's power marketing operations - two benefits not offered by ScottishPower.
The Oregon staff also had noted that contrary to PGE's situation, PacifiCorp already had service quality measures in place, so ScottishPower's offer of SQM initiatives would not help much. It also saw problems with currency risk, an acquisition premium, and ScottishPower's higher beta value - reported by the UK regulator at 0.91, compared to 0.29 for PacifiCorp. No. UE-981627, testimony filed June 15, 1999 (Wash.U.T.C.); No. UM 918, testimony filed July 26, 1999 (Ore.P.U.C.).
CP&L + NCNG. North Carolina OK'd the merger between Carolina Power & Light Co. and North Carolina Natural Gas Corp., citing benefits for CP&L in obtaining low-cost fuel to expand gas-fired generation to meet load growth.
CP&L and NCNG must file a 10-year plan on gas pipeline expansion plans, to allow regulators to review whether pipeline routing will discriminate against non-affiliated electric generators. Docket Nos. E-2, SUB 740, G-21, SUB 377, July 13, 1999 (N.C.U.C.).
NEES + National Grid. Connecticut OK'd the takeover of New England Electric Service by the UK's National Grid Co., finding no adverse impact on the state's electric ratepayers. Docket No. 99-03-43, June 30, 1999 (Conn.D.P.U.C.).
KN Energy + Kinder Morgan. KN Energy Inc., the nation's second-largest operator of natural gas pipelines and storage, has agreed to purchase Houston-based Kinder Morgan Inc. for $506 million in stock. The combined company, to be known as Kinder Morgan (with Richard D. Kinder as CEO), would operate some 30,000 miles of pipeline and have a value of about $8.5 billion.
The deal came less than a month after plans crumbled for Sempra Energy to acquire KN Energy.
SEMCO + ENSTAR. Michigan-based SEMCO Energy plans to acquire Alaska-based ENSTAR Natural Gas Co. and the Alaska Pipeline Co. from Ocean Energy. ENSTAR serves over 100,000 customers in Anchorage, and has achieved annual customer growth of almost 3 percent in the last three years. APC delivers natural gas from fields in south central Alaska to ENSTAR's distribution system.
GPU + Midlands. GPU Inc. and the Cinergy subsidiary, Cinergy Global Resources Inc., have agreed for GPU to buy out Cinergy's 50 percent share of the United Kingdom's Midlands Electricity plc for $700 million in cash, after the two companies had jointly acquired the British regional electric company in 1996.
Midlands Electricity, held through Avon Energy Partners Holdings, would become a wholly owned subsidiary of GPU, which would acquire ME's distribution and contracting business, plus 1,150 MW of independent power plants worldwide. Cinergy would retain gas trading operations headquartered in London.
Courts
Marketing Gimmicks. The Ohio Supreme Court struck down a marketing plan by an Ameritech cable television subsidiary that gave vouchers to customers to trade for rate discounts from Ameritech's affiliated local telephone carrier. The court said the vouchers violated state laws that barred undue rate preferences. Ameritech Ohio v. Ohio PUC, 86 Ohio St.3d 78, July 14, 1999 (Ohio).
Retail Wheeling. A federal appeals court said an Iowa electric utility did not violate antitrust law by refusing to wheel third-party power to a retail customer, since it had state action immunity under a "clearly articulated" state policy of pervasive utility regulation.
The customer had argued the state did not "actively supervise" such policy, since it did not monitor third-party wheeling services performed by utilities. North Star Steel Co. v. MidAmerican Energy Holdings Co., No. 98-2987, 1999 WL 457089, July 7, 1999 (8th Cir.).
Software Cost Overruns. An Ohio court upheld a state PUC ruling that disallowed excessive costs incurred to develop a computerized billing system for gas utility customers. The court added, "We need not slog through the daily history of the development of this project to determine that it was mismanaged." Cincinnati Gas & Elec. Co. v. Ohio PUC, 86 Ohio St.3d 53, July 7, 1999 (Ohio).
QF Avoided Costs. A state court dismissed a complaint by qualifying cogenerators (QFs) against an electric utility for allegedly underpaying the QFs by miscalculating avoided costs in the tariffs (OK'd by the state PUC) that formed the basis for the QF contract rates.
It explained that the contracts did not require payment of all avoided costs, but only of the rates shown in the tariffs: "[P]laintiffs concede [the utility] has paid those amounts. Thus, there is no unlawful conduct." City of Boulder v. Pub. Serv. Co. of Colo., No. 98CA0581, 1999 WL 459768, July 8, 1999 (Colo.App.).
Retail Wheeling. The Michigan Supreme Court struck down the state's retail wheeling program, set to begin on Sept. 20, deciding that regulators could not force electric utilities to transmit power for competitive suppliers without legislative authority, since the plan could not qualify for commission jurisdiction as "ratemaking."
Reacting quickly, PSC Chairman John G. Sanda asked for initial briefs on the matter by July 28, and reply briefs by Aug. 11.
Consumers Energy and Detroit Edison Co. said they would proceed voluntarily with the wheeling programs and promised to work with state legislators. They said Gov. John Engler had indicated he would support a state law to codify PSC policy. Consumers Power et al. v. Mich. PSC, et al., Nos. 111482, et al., 1999 WL 462507, June 29, 1999 (Mich.).
State Legislatures
Coal Tax Credits. The Ohio Senate passed legislation on June 30 to boost the tax credit from $1 to $3 per ton for utilities burning Ohio coal. Amended House Bill 384, sent to the governor for signature, also would make changes in mine safety and operation. See www.legislature.state.oh.us/bills.cfm?ID=123_HB_384.
Gas Unbundling. Colorado Gov. Bill Owens signed Senate Bill 99-153, a permissive gas unbundling law designed to foster supplier choice for smaller customers. The act allows gas utilities to file implementation plans voluntarily with the state PUC, which must then give a progress report to the General Assembly by December 2000 and recommend further legislation needed to promote competition, such as authorizing the PUC to mandate participation by Colorado utilities.
The law allows the PUC to grant stranded-cost recovery, so long as it does not increase the annual charges for regulated gas delivery service beyond 1 percent of a utility's gas revenues for 1998 - unless the utility is unable to recover the costs within 15 years. In that case, the PUC could increase the rate to 2 percent of revenues.
The PUC can allow a utility to compete as supplier, but can require it do so through an affiliate. Regulated utility supply service must remain until one-third of the utility's customers are served by competitive suppliers, 18 percent are served by non-affiliate suppliers and five non-affiliate suppliers participate.
See www.dora.state.co.us/puc/RE/GAS/SB99-153.htm.
Power Plants
Workforce Staffing. In a proposed order on the sale of fossil-fired power plants from Commonwealth Edison to Edison Mission Energy (a subsidiary of Edison International), two hearing examiners at the Illinois commission ruled that a state law requiring buyers to hire "a sufficient number of nonsupervisory employees" to run and maintain the plant and to offer employment "to the nonsupervisory workforce" meant the parties must offer jobs to all such employees - not just some. Nos. 99-0273, 99-0282, July 13, 1999 (Ill.C.C.).
Ohio/Penn Swap. Denying arguments by FirstEnergy Corp., the Ohio PUC ruled it has jurisdiction to review the utility's planned exchange of generating plants with Duquesne Light Co. as an "abandonment" of assets, though no plant subject to the deal will cease operation.
FirstEnergy will acquire Duquesne's interest in Sammis unit 7 (187 MW), Eastlake unit 5 (186 MW), Mansfield units 1, 2 and 3 (401 MW) and the Perry nuclear plant (164 MW). In exchange, FirstEnergy will transfer its ownership in Avon Lake (743 MW) New Castle (339 MW) and Niles (246 MW). Case No. 98-1636-EL-UNC, July 15, 1999 (Ohio P.U.C.).
New York Load Pocket. On July 14 the New York PSC announced it had approved a sale of electric generating facilities by Consolidated Edison to Astoria Generating Co., L.P., for $550 million, including Con Ed's Astoria plant in Queens, plus 48 gas turbines in Brooklyn, totaling 1,855 MW, thus continuing Con Ed's exit from generation in New York City.
Emergency Financing. Taking emergency action so that the deal could be closed, the New York PSC OK'd debt issues of $700 million (for plant acquisition) and $30 million (working capital) in connection with Erie Boulevard HydroPower L.P.'s purchase of 72 hydroelectric generating facilities from Niagara Mohawk Power Corp. The company will fund 50 percent of the purchase price with equity. Affiliates of Erie Boulevard also will use the debt to finance buys of other plants. The PSC had approved the sale on May 27 (See News Digest, July 15, p. 17). Case No. 99-E-0839, June 28, 1999 (N.Y.P.S.C.).
Seabrook Risk. The New Hampshire PUC OK'd the transfer of Montaup Electric Co. Inc.'s 2.9 percent stake in the Seabrook nuclear plant to Little Bay Power Corp. - as long as Little Bay adheres to a settlement by which it must set aside funds to meet its portion of the Seabrook budget during periods the plant is not running. The agreement came after New England Power Co. Inc., a joint owner in Seabrook, protested the transfer because of concern over increased financial risk, since Montaup has a secure customer base, but Little Bay does not. Order No. 23,239, June 21, 1999 (N.H.P.U.C.).
Merchant Plant Ratings. Fitch IBCA's newly formalized criteria for rating merchant power plants will examine six areas in conducting plant evaluations: (1) supply/demand studies and market price forecasts; (2) fuel and risk management; (3) plant assets and operations; (4) transmission availability; (5) legal structure and debt terms; and (6) financial parameters and cash flow models. Only projects that score well across these categories will achieve investment-grade ratings ('BBB-'or higher) from Fitch IBCA.
Fitch IBCA warns that merchant plants are less likely to operate under long-term sales contracts, and thus carry higher risks. The July 12 report ("Merchant Power Plant Rating Guidelines") contains four case studies. See www.fitchibca.com.
Power Markets
Electric Price Forecasts. State regulators will allow Connecticut Light & Power to recover up to $3.5 billion in stranded costs - less than the company's estimate of $4.4 billion - reflecting a re-evaluation of various power price forecasts for New England, based on such models as GE MAPS (General Electric Market Assessment and Portfolio Strategies), PROPHET (Price Optimising Predictor for Help in Electricity Trading), CUMULUS and POLARIS.
On reviewing a half-dozen forecasts, it approved an electric market price forecast for the New England Power Pool, broken down by energy and capacity for each year from 2000 to 2030. The forecast has energy prices dipping during the next several years, before rising again, but capacity prices rising very rapidly between 2002 and 2005:
NEPOOL Power Price Forecast Per Connecticut
DPUC ($/MWh)
Year Energy Capacity
2000 32.05 0.03
2001 30.75 0.10
2002 31.88 0.17
2003 33.15 2.77
2004 32.62 4.97
2005 33.29 6.75
2010 36.39 7.13
2015 40.89 7.31
2020 46.49 7.47
2030 56.26 8.35
The DPUC said forecasts based on the U.S. Energy Information Administration's 1999 Annual Energy Outlook likely were too low, since they reflected crude oil price figures at near-record lows, while more recent activity in the NYMEX crude oil futures market suggested higher fuel costs for generation. Thus, it accepted five-, 10- and 20-year fuel price forecasts ($/MMBtu) for residual oil ($2.63, $2.58, $2.48) and natural gas ($2.87, $2.79, $2.64) filed by Reed Consulting Group.
The DPUC predicted that NEPOOL's current 14 percent reserve margin would decline to 12 percent after 2001, as combined-cycle gas-fired units steal some of the 17 percent fuel share now claimed by nuclear generation. Yet, despite some 3,796 MW of added NEPOOL capacity under construction or recently completed, it predicted the region would continue to rely in part on imports from Canada beyond 2000. Docket No. 99-02-05, July 7, 1999 (Conn.D.P.U.C.).
California Trading. San Diego Gas & Electric Co. asked the FERC to rescind a 1996 order forcing it to trade all its market-priced bulk power through the California Power Exchange. It offered testimony by consultant William Hieronymus of PHB Hagler Bailly suggesting no further "prophylactic purpose" for the PX-only rule.
Hieronymus acknowledged that SDG&E in 1996 had controlled "all the generation capacity" in the San Diego Basin load pocket (except for 281 MW supplied by "must-take" qualifying facilities), giving it market power. But as of mid-1999, he said SDG&E had mitigated all market power, as it controlled only 334 MW of QF contracts in the Basin, plus a 430-MW share on the San Onofre station. Meanwhile NRG/Dynegy and the San Diego Unified Port District had acquired SDG&E's remaining capacity in the Basin (1218 MW and 755 MW, respectively).
As of July 22, the California PX had intervened in the case, as had Southern California Edison and Pacific Gas & Electric Co. (the biggest buyer and seller in the PX). Docket ER99-3426-000, filed June 30, 1999 (F.E.R.C.).
Forward Contracts. On June 28 Automated Power Exchange Inc. protested a plan filed earlier by the California Power Exchange to set up a "block forward market" (BFM) through its affiliate, CalPX Trading Services, saying it would shift costs to the PX's captive ratepayers, who already were funding PX startup costs, while customers trading the PX block forwards would get a "free ride" of costly PX infrastructure.
Said APX: "This is another instance in which CalPX's captive ratepayers will subsidize the offering of an optional market."
CalPX answered the protest on July 13, calling it "nothing more than a belated attempt to reargue the basic fee structure for CalPX core operations" OK'd by the FERC in the initial PX rate case. In that case, the PX recovers all startup, development and initial working capital costs ($100 million) from full requirements customers of PG&E, SoCal Edison and SDG&E through annual installment payments through Jan. 2, 2001.
The PX added, "those costs would remain the responsibility of the three utilities ¼ even if CalPX were to go out of business tomorrow."
The FERC had OK'd block forward contracts for the PX on May 26. Meanwhile, APX announced on June 25 that it had filed its initial brief in the D.C. Circuit in its appeal (No. 98-1415) challenging FERC jurisdiction over APX. Docket No. ER99-2229-000 (F.E.R.C.).
Gas Pipelines
Sawgrass Project. Duke Energy has announced plans to build the $1.3 billion Sawgrass Energy Transmission System natural gas pipeline from Mobile, Ala., into the Florida Panhandle, and then down the Florida peninsula.
But two other companies also seek authority to build along the same route, projected as the nation's fastest growing gas market, making it unlikely that the FERC would approve all three. Duke said its project would move about 1 billion cubic feet of gas per day and would become operational in 2003.
Guardian Project. The Wisconsin PSC allowed Wisconsin Gas to enter a gas purchase agreement requiring transportation of 650 million cubic feet of natural gas per day on the Guardian pipeline when it goes into service Nov. 1, 2002.
Guardian will transport gas from interconnections with Alliance, Northern Border, Midwestern Gas Transmission, Natural Gas Pipeline of America and the proposed TriState Pipeline at the Chicago Hub near Joliet, Ill., to northern Illinois and southern Wisconsin markets. Three other shippers recently signed firm precedent agreements with Guardian to transport 53 mcf per day.
Meanwhile, the PSC denied a request by ANR Pipeline Co. to intervene in a review of the 1998-2003 gas supply plan filed by Wisconsin Gas Co., saying the pipeline had no direct interest in the outcome, even though it provided transport service to WGC. ANR had claimed it could suffer stranded costs under the plan, which contained an agreement for firm transport service on the Guardian Pipeline. No. 6650-GP-101, June 29, 1999 (Wisc.P.S.C.).
Independence Project. Independence Pipeline and the Ohio Siting Board have agreed to a set of standards to protect the region's environment and agricultural resources during construction, requiring compliance with a mitigation plan worked out with the Ohio Federation of Soil and Water Conservation districts governing cleanup and restoration.
Transmission & ISOs
Nonfirm Curtailment. Clarifying some mechanics of curtailment under line loading relief procedures, the FERC accepted a proposal by the North American Electric Reliability Council to eliminate use of the "weakest link" standard for scheduled nonfirm service crossing multiple systems, which had assigned curtailment priority based on the lowest priority of any contract within the path.
Instead it will institute the "constrained path" method, which will assign curtailment priority by reference to the transmission provider on whose system the constraint is located. Docket No. ER99-2997-000, July 14, 1999, 88 FERC ¶61,046.
ISO Governance. On July 2 the member systems of the New York Power Pool submitted a revised agreement to propose a new structure and voting scheme for the management committee of the proposed New York Independent System Operator, after the FERC had ruled that the ISO would lack independent governance.
Earlier, on June 30, the NYPP members had filed arguments opposing protests by independent power producers and municipal utilities on a wide variety of issues, such as tariff structure, installed capacity requirements, imbalance penalties, congestion contracts, confidentiality of bid data, etc., describing many of the protests as collateral attacks already rejected by the FERC in January.
The new governance structure, filed by attorney (and former New York PSC chairman) Paul Gioia of LeBoeuf, Lamb, Green & McCrae, assigns new voting shares to five industry sectors: transmission owners (20 percent), generation owners (21.5 percent), marketers and energy suppliers (21.5 percent) consumers (20 percent), broken among three segments for large, small and government agency customers), and environmental and public power advocates (17 percent). Committee action would require a 58 percent vote. Docket Nos. ER97-1523 et al. (F.E.R.C.).
Nuclear Power
Plant Event Reporting. Comments are due by Sept. 20 on a petition for rulemaking filed by the Nuclear Regulatory Commission to lessen requiremen
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