News Digest
April 1,
2001
Dot.Com Favoritism.
A group of Pennsylvania electric utilities (UGI, Metropolitan Edison,
PECO Energy, Pennelec, and PPL) accused the PJM Independent System Operator
(ISO) of violating its own rules by allowing the competitive electric
retailer Utility.com to prematurely terminate its operating agreements
with the ISO after the supplier ceased operations in the state in a manner,
say the utilities, that "violated its obligations under Pennsylvania law."
According to the
utilities, the success of the Pennsylvania market has stemmed in part
because PJM has synchronized its tariffs with the state's retail access
rules, but that in this case, they allege that PJM coddled Utility.com
and its withdrawal from markets by allowing transmission service to shift
from one load-serving entity outside the window of the meter read date
required by PJM and state market rules. FERC Docket No. EL01-38-000,
filed Feb. 14, 2001.-B.W.R.
NEPOOL Governance.
A broad coalition of New England electric consumers, including industrial
companies (National Semiconductor, Georgia-Pacific, and Chinet) and the
Maine Public Advocate have asked the Federal Energy Regulatory Commission
(FERC) immediately to reform the governance of the New England Power Pool,
saying that the 66.6 percent minimum vote required to approve major policies
(congestion management system, for example) is simply unworkable and will
interfere with the development of a collaborative plan for a New England
regional transmission organization.
The coalition
expressed appreciation that NEPOOL had given end users a "place at the
table," and also saw no problem with equal 20-percent voting shares for
five different industry segments, but insisted that "common sense principles
must prevail so that rough justice can be achieved." FERC Docket No.
EL01-39-000, filed Feb. 22, 2001.
Alliance Transco.
Nearly every interested party has asked for a rehearing of the FERC's
Jan. 24 decision that OK'd certain aspects of the proposed Alliance transmission
organization, including state PUCs (Michigan, Illinois, Ohio, Indiana,
Pennsylvania), marketers (Enron Power Marketing), electric associations
(APPA, NRECA), consumer advocates (NASUCA), customer coalitions (industrial
and transmission-dependent utilities) and, of course, the Alliance sponsors
themselves. The parties challenge FERC rulings on several points:
- Alliance Sponsors.
Insist on rights for Class B (passive) owners to veto future RTO merger
or dissolution, and for Class C (non-divesting) participants to veto
rate design changes during a moratorium period set up to attract new
members. Accuse FERC of pre-judging rate design matters before Alliance
files its tariff-specifically, on whether the "regional through and
out" rate (RTOR) should exceed the highest zonal rate.
- Electric Associations.
Claim that new proposed "stated rate" method for network transmission
service violates FERC's previously accepted method (in Order 888) based
on load ratio. Also argue that new single RTOR rate will not remedy
problem of rate pancaking on internal transactions within the Alliance
region. Question why FERC lauds expansion of Alliance when two new members
(Dayton P&L and NIPSCO) lack extensive transmission networks, and when
additional member growth (Illinois Power, for example) erodes the already
approved Midwest ISO.
- State PUCs. Claim
Alliance still lacks scope and size, and still functions as a "toll
gate," collecting an added transmission charge for power trades between
the western ECAR and MAIN regions to the West, and PJM, the New York
ISO and PJM West (Allegheny Power and Duquesne Light) to the East. Oppose
broad discretionary right of Alliance members to accept or deny new
members that could "improve efficiency" of the transco.
- Transmission Customers.
Also attack proposed RTOR, but say key problem is external pancaking,
not internal, as suggested by electric associations. Say attorneys Robert
Weishaar and Sam Randazzo, representing Coalition of Midwest Transmission
Customers, "The Alliance Companies' RTOR is akin to replacing two toll
booths, each charging a fifty-cent fare, with a single toll booth charging
a dollar." FERC Docket No. ER99-3144-006, filed Feb. 23, 2001.-B.W.R.
Underscheduling.
Universal Studios lodged a complaint with the FERC seeking to redress
tariff violations and outages that it attributed to "deliberate underscheduling
of power needs" by Southern California Edison, which delivers electricity
to Universal at retail.
The movie studio
said that Edison's underscheduling "directly caused" the ISO to handle
"a constant crisis in both reliability and supply," that, according to
Universal, led Edison to impose curtailments on the movie studio under
an interruptible retail tariff, when no curtailment was really necessary.
FERC Docket No. EL01-42-000, filed March 2, 2001.
Public Power
Participants. The FERC accepted an operating agreement and a transmission
control agreement between the California ISO and the City of Vernon, Calif..
The city is believed to be the first municipal entity to become a participating
transmission owner in the ISO. Docket Nos. ER01-871-000, 94 FERC ¶61,145
(operating), ER01-724-000, 94 FERC ¶61,141 (control), Feb. 21, 2001.-B.W.R.
Virtual Bidding.
Enron Power Marketing lodged a protest against the New York ISO's Feb.
2 progress report to introduce so-called "virtual bidding" (buying and
selling by marketers who have no obligation to serve load), saying it
would be discriminatory for the ISO to introduce price-capped load bidding
by May 1 (as stated in the report), while delaying virtual bidding until
November.
Enron argued that
each new program should be introduced simultaneously. "Physical market
participants [entities who serve load] are currently engaging in implicit
virtual bidding," said Enron, "every time their day-ahead load bids deviate
from their realized load." FERC docket No. EL00-90-000, filed March
6, 2001.-B.W.R.
Creditworthiness.
In the wake of the Valentine's Day order by the FERC, which sought to
limit the extent to which the California Independent System Operator could
waive credit requirements for scheduling coordinators, and the commotion
that followed (generators accused the ISO of ignoring the order; the Power
Exchange said the power producers and many others had misinterpreted the
order), the ISO said it had amended its tariff in an attempt to squelch
the confusion.
New tariff section
2.2.7.3 says the ISO may accept schedules to serve load of a utility that
no longer meets creditworthiness requirements if the load is served by
(1) resources the utility owns, (2) a resource under utility contract
to serve utility load, or (3) a resource bought from a third party who
has provided assurance of payment on behalf of the utility. FERC Docket
No. ER01-889-000, filed March 1, 2001.-B.W.R.
Northeast Price
Caps. New York PSC chairman Maureen Helmer said the state would ask
the FERC to examine whether the existing bid cap of $1,000 per megawatt-hour
(MWh) in northeast bulk power markets is adequate to protect consumers,
as part of a five-part plan announced Feb. 20 to boost energy competition
and ensure adequate electricity supply.-L.A.B.
California
Property Seizures. Showing problems stemming from defaults on power
purchases, Tucson Electric complained to FERC that California Gov. Gray
Davis violated federal law in two Executive Orders issued Jan. 31 (D-20-01,
D-21-01). In those orders, the Governor barred the California Power Exchange
from liquidating certain contract interests and instead commandeered as
state property certain block forward "matches" representing power purchased
transactions conducted through the PX by Southern California Edison Co.
and Pacific Gas & Electric.
- Alleged Illegal Acts.
Tucson Electric claims injury, as it sold power to the California utilities
through the PX, but says the Governor's orders prevent the company from
gaining access to collateral as security for the losses. The Arizona
utility claims the transfer of the PX contract interests required FERC
approval under Federal Power Act section 203 because the PX qualifies
as a "public utility" under the Act. Tucson Electric also claims that
by jeopardizing its right to collect payment for power sales through
the PX, the Governor's action violates the filed rate doctrine, since
PX market prices set by PX computer algorithms represent valid FERC-approved
utility rates that carry force of law.
- Suggested Remedy.
At a minimum, Tucson Electric asked the FERC to force the state of California
to step into the shoes of Edison and PG&E and assume financial:
"Specifically, this would
entail the assumption of Edison's and PG&E's full extent of indebtedness
to the PX, generators and independent suppliers, including any debts
PG&E and Edison may default on in the future."
Tucson added,
"By seizing part of PG&E's and Edison's assets, without assuming responsibility
for their liabilities, Governor Davis and the State of California have
pushed the utilities closer to bankruptcy and eradicated any possibility
that suppliers will be reasonably compensated for future deliveries."
Earlier, on Feb.
2, the PX had estimated the value of seized forward positions held by
Edison at $651 million, representing 2.846 million MWh (average value
equals $228.75/MWh). FERC Docket No. EL01-40-000, filed Feb. 27, 2001.-B.W.R.
Ameren Corp.
has licensed Caminus Corp.'s Zai*Net Manager, Zai*Net Risk Analytics,
and Zai*Net WeatherDelta products to address its energy trading, marketing,
and risk management requirements. AmerenEnergy Inc., the power trading
and marketing subsidiary of Ameren Corp., will deploy Caminus' Zai*Net
Manager for deal capture, scheduling, and accounting, and Zai*Net Risk
Analytics for risk management in its power operations.
Pantellos,
an independent online marketplace for the utility and energy services
industries, and itiliti Inc., a provider of collaborative workforce
management solutions, have entered into an exclusive partnership intended
to further enhance Pantellos' integrated suite of supply chain capabilities.
The partnership will enable Pantellos members to manage their contingent
workforce, or staff augmentation requirements, and supplier relationships
through a collaborative, web-based solution.
First Union
Securities has provided financing for Universal Compression Inc.,
a natural gas compression services company, to acquire Weatherford
Global Compression. First Union's roles in the financing included:
(1) sole lead arranger, asset-backed securitization; (2) administrative
agent and sole arranger, senior secured revolving credit facility; and
(3) co-lead manager, high-yield synthetic lease offering.
World Wireless
Communications' XtraWeb subsidiary has signed a letter of understanding
with Texaco Natural Gas Inc. for the co-development, marketing
and sale of the World Wireless embedded X-traWeb technology to selected
gas distribution customers of Texaco Natural Gas. Under the terms of the
agreement, X-traWeb and Texaco Natural Gas have committed to the development
and sale of natural gas metering equipment for use by natural gas distributors,
resellers, and gas service providers.
edocs,
a provider of Internet billing and customer management solutions, has
announced its support for Siebel Systems Inc.'s eCommunications
2000.3 and eEnergy 2000.3, a family of eBusiness applications software
designed specifically for the communications and energy industries. Siebel
eCommunications and eEnergy allow organizations to manage, synchronize,
and coordinate all customer touchpoints including the Web, call center,
field organization, and distribution channels.-C.J. L.
Vermont Yankee
Plant. Finding the price too low to reflect fair market value, the
Vermont Public Service Board rejected the deal for Vermont Yankee Nuclear
Power Corp. (which provides one-third of all power used in Vermont), to
sell its namesake nuclear plant to AmerGen Energy Co., and dismissed the
application to allow the owner "to reevaluate its decision to sell the
station." It acted after Entergy Nuclear Corp. offered on Jan. 12 to pay
$50 million, more than double AmerGen's November offer of $23.8 million.
AmerGen upped its bid to $51.5 million on Jan. 22, but that did not sway
the board, which concluded that "this bid demonstrates a value for Vermont
Yankee that is significantly in excess of AmerGen's second proposal."
Docket No. 6300, Feb. 14, 2001.-B.W.R.
Need Determinations.
The Florida PSC found need for capacity to justify the Brandy Branch
(three gas turbines, each rated at about 173 megawatts) proposed by JEA
(formerly Jacksonville Electric Authority), based on the utility's proposed
15 percent reserve margin criterion. Docket No. 001703-EM, Order No.
PSC-01-0500-FOF-EM, Feb. 28, 2001.-B.W.R.
Merchant Plant
Certification. Florida regulators also issued its final order certifying
need for the 529-megawatt Osprey merchant generating plant proposed jointly
by Calpine and Seminole Electric Co-op. to get around the state's requirements
for competitive alternative bids and its policy that need must be shown
through an obligation to serve. Docket No. 001748-EC, Order No. PSC-01-0421-FOF-EC,
Feb. 21, 2001 (Fla.P.S.C.).-B.W.R.
Competitive
Metering. New York adopted its final practices and procedures manual
to govern competitive electric metering. Among other points, it adopted
policies to require that:
- Customers may choose whether
to contract directly with a Meter Service Provider (MSP) or Meter Data
Service Provider (MDSP), rather than indirectly through the utility
or the retail energy supply company (ESCO), which in turn would deal
with the MSP or MDSP.
- Direct customers who buy
power in wholesale markets and serve as their own retail supplier perform
their own MSP or MDSP functions, but may purchase metering services
from either ESCOs or utilities.
- Large-volume time-of-use
customers may continue to own their own meters (though the regulators
understood that no eligible customer had ever chosen that option). Case
Nos. 00-E- 0165, 94-E-0952, Feb. 26, 2001 (N.Y.P.S.C.).-B.W.R.
Natural Gas
Unbundling. Connecticut regulators rejected a petition by the state's
consumer counsel to open a docket to study issues arising from competitive
natural gas service, including (1) shifting of costs, (2) supplier of
last resort, and (3) methods to reduce need for redundant purchases of
firm pipeline capacity by both distribution utilities and competitive
marketers. Docket No. 01-02-01, Feb. 21, 2001. (Conn.D.P.U.C.).-B.W.R.
Ancillary Generation
Services. Citing conflicts with theory on electric restructuring,
New York rejected a proposal by Strategic Power Management Inc., to set
up a pilot program within Orange & Rockland's PowerPick Plus Program for
customer choice that would recover ancillary services (regulation, load
following, etc.) through delivery charges paid to utilities, rather than
through the electric commodity charge controlled by competitive retail
power suppliers. Case 00-E-1535, Jan. 31, 2001 (N.Y.P.S.C.).-B.W.R.
Negotiated
Contract Rates. New York agreed to calculate its minimum floor for
retail electric rates negotiated individually by contract on an annual
basis, rather than monthly, as before, so as to mitigate effects of price
volatility. The floor equals marginal costs (the calculation) plus one
cent per kilowatt-hour. Case 00-E-1463, Feb. 16, 2001 (N.Y.P.S.C.).-B.W.R.
Other February
Orders.
- Florida. Opened
rulemaking docket to set new standard for accuracy of natural gas meters.
Docket No. 010105-GU, Order No. PSC-01-0430-NOR-GU, Feb. 22, 2001.
- Maine. Opened rulemaking
to create statewide, needs-based assistance program for low-income electric
customers. Docket No. 2001-42, Feb. 6, 2001.
- Massachusetts. Opened
docket to develop generic terms and conditions for advanced metering
services by electric utilities. D.T.E. 01-28, Feb. 8, 2001.
- Michigan. Adopted
guidelines proposed by staff and orders all electric utilities to develop
standards for interconnection of merchant generating plants to regulated
transmission and distribution systems. Case No. U-12485, Feb. 5,
2001.
- Michigan. Opened
docket to hear request by advocacy group to block move by Detroit Edison
to transfer all grid assets to its affiliate, International Transmission
Co., or else force utility to remove all transmission costs from retail
electric rates. Case No. U-12579, Feb. 22, 2001.
- North Carolina. Asked
for staff proposal and public comments to develop policy on what evidence
to require for certification of new "merchant" power plants. Docket
No. E-100, SUB 85, Feb. 7, 2001.
- North Carolina.
Opened case to study possible voluntary check-off options on energy
bills for customers to designate funding support for green power and
public benefit programs. Docket No. E-100, SUB 90, Feb. 16, 2001.
- Oregon. Opened docket
to set legal standards for merger approval. UM 1011, Feb. 9, 2001.
- Virginia. Set hearing
for Oct. 1 on request by Virginia Power to form separate generating
subsidiary. Asked for cost estimate to "better understand" the transaction.
Case No. PUE000584, Feb. 22, 2001.-B.W.R.
Ferc Order
888. The U.S. Supreme Court agreed to review the case of a federal
appeals court decision (225 F.3d 667, Nov. 14, 2000) that upheld FERC
888. The high court will review the FERC's interpretation of conflicting
state and federal jurisdiction over electric transmission. New York
v. FERC, No. 00-568,and Enron Power Marketing, Inc. v. FERC, No. 00-809,
Feb. 26, 2001 (U.S.).-B.W.R.
Non-profit
Solicitations. A North Carolina appeals court denied standing to the
Gas Research Institute to ask the state utility commission to authorize
local gas utilities to make voluntary contributions for research and development.
State ex rel. Utils. Comm'n v. Carolina Utility Customers Asso., Inc.,
No. COA00-8, Feb. 6, 2001, (N.C.App.).-B.W.R.
Gas Storage
Certification. Reversing and remanding a trial order by a federal
district court judge, a U.S. federal appeals court ruled that where the
operator of a natural gas storage facility had already obtained certification
from the FERC, the operator had standing to seek an injunction against
a state environmental board on the ground that federal law preempted any
additional state permitting process. NE HUB Partners, L.P. v. CNG Transmission
Corp., No. 00-3387, 239 F.3d 333, Jan. 29, 2001 (3d Cir.).-L.A.B.
News Digest
was compiled on March 6 by Bruce W. Radford, editor-in-chief, with contributions
as noted from Carl J. Levesque, associate editor, and Lori A. Burkhart
contributing legal editor.
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