Old directors fade away old era

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NU’s president and chief execu-

As of now, both the Connecticut

requiring third parties to pay for

tive officer. “Then the state says

Department of Public Utility Con-

transmission expansion that may

you have got to balance efficien-

trol and NU have threatened to

not be needed for reliable opera-

cies against other concerns.

withdraw support for the merger.

isting transmission capacity and

It remains to be seen whether they

“Just make the customer

tion or that may be premature.”

-

whole,” he urges.

FERC also left some breathing indeed an “immutable constraint”

cording to Ashley Brown, a com-

on its ability to provide transmis-

missioner on the Ohio Public Util-

sion service demanded by a

ity Commission, who provided

wholesale customer, FERC will

testimony in the proceeding for

conduct a technical conference to

the states favoring the merger and

see how the limited transmission

arguing against the sort of trans-

available will be allocated. But

mission conditions FERC even-

none of the parties -

tually included in its order.

neither the

“This was not helpful,” Brown

utilities or state

regulators, nor the have-nots -

says of the decision. “FERC

likes the FERC proposal as made,

should pull back and let the states

because it would leave too much

decide” what to do regarding

h4ay O’Driscoll

Plugging a “Planning Gap”

Novel Accord on Regional Planning Read for Senate Mar I!-up

D

uring the Senate Energy and

Natural Resources

Committee’s markup of its om-

up to FERC.

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will blink first. -

FERC mishandled the case, ac-

room. If NU determines there is

transmission-have

or FERC -

U and its friendly regulators

nibus energy bill this spring, there

concede that reliability is

were rumors of a dramatic

not a question in New England.

development:

an accord between

The question is profits. NU wants

Entergy and Arkansas regulators

its transmission service charges to

-

at odds for years over the costs

recover its opportunity costs -

of the Grand Gulf nuclear plant -

any lost revenues that result from

on a new approach to regional in-

its wheeling power and tem-

tegrated resource planning for

porary loss of economy sales or

Entergy,, or for holding company

purchases. But determining those

systems in general. But no such

costs can be daunting. How do

transmission.

you determine the value of a “lost

gone out of their way to get them-

opportunity’

selves into a confrontation.

to purchase

“They seem to have If

proposal was seen during the markup. Now the accord has hatched.

economy power, compared to

they wanted to exert leadership,

Its official unveiling at a media

what the utility charges for the

they should encourage state and

briefing in Washington in mid-

wheeling transaction?

federal regulators to discuss the

September went smoothly, with

situation together,” Brown says.

the Arkansas PSC, the New Or-

In its appeal of the FERC

Ellis agrees, adding that a

decision, NU says denial of oppor-

leans City Council, and Entergy

tunity-cost pricing amounts to

generic transmission policy is a

(which had three representatives

nothing other than a redistribu-

possibility, but only if “everyone

on hand) explaining how the

tion of wealth from the owners of

works together to create a law.

proposal would create an ap-

transmission facilities and their

FERC is trying to determine pric-

propriate vehicle for integrated

customers to others.

ing and access to resources that it

resource planning to fill a plan-

cannot create more of,” Ellis says.

ning void created by the U.S.

‘We have pressure from FERC [to] build or else,” says Bill Ellis,

Supreme Court in its 1988 Missis_

October 1991

77

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sippi Puwer & Light decision. Less

method, each state would appoint

clear than the vehicle itself -

a representative to a regional

state regulators to avoid another

page amendment which deals

board, which could invite the

Grand Gulf dispute, by joining

fairly efficiently with a complex

views of all interested parties on

together to decide on regional

set of circumstances -

the plan. There is an expectation

power needs in advance -

a 12

is how

The new proposal would allow

how

other holding companies and the

of informality about the process,

to meet them and pay for them.

Senate itself will react.

said Washington, D.C., attorney

FERC could get involved in the

Scott Hempling, who represents

process by invitation from one of

the Arkansas Commission.

the states or the holding company,

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rafted as a new title to S. 1220, Sen. Bennett

There

Johnston’s (D-La.) omnibus ener-

is “nothing prescriptive” in the

but only if the regional coopera-

gy bill, the Arkansas-Entergy

proposal as to how the board is

tive effort breaks down, Hem-

proposal focuses on development

formed or operates, he said.

pling added. Vince said he

of a regional integrated resource plan. The object of the legislation, proponents say, is the regional

The proposal offers state regula-

expected the desire to keep de-

tors and utility holding com-

cision-making in the region

panies a way to avoid lengthy bat-

would be enough of a spur for the

tles before the Federal Energy

regional regulators to reach consensus.

plan, not to create a regional

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board. A briefing memo on the draft legislation makes clear that

nce the states agree on a plan, it would be filed as a

the push to create a regional in-

rate schedule at FERC. The plan,

tegrated resource plan process

which must be updated by the

comes from the Mississippi Power

regional board every two years,

& Light case, which made clear

would guide and bind FERC in its

that “lnlo one today has clear

ratemaking and other duties. ‘This is not an extra layer of reg-

authority to regulate resource planning by a regional holding

ulation,” through which holding

company.” FERC has no clear

companies must pass before

authority to do so, while the

going to FERC. In effect, it

states are prevented from doing

preempts FERC, Hempling said. If the utility objects to the final

so in any meaningful way by the Regulatory Commission and the

plan, it can ask FERC to review

courts over the prudence of new

the proposal. But FERC can only

three ways a regional integrated

utility construction, said Hem-

reject the proposal if it finds “une-

resource plan could be approved:

pling.

quivocal public necessity” for a

Mississippi case. Under the proposal, there are

The current resource decision

new plan, and then it must hand

approving a plan by unanimous

process is very costly and satisfies

the IRE back to the regional board

vote, (2) by each state adopting its own plan and certifying accept-

no one, added attorney Clinton

for reconsideration.

Vince of Vemer, Liipfert,

ability of the plans of the other

Bernhard, McPherson & Hand,

certainty on future costs and al-

states, (3) or, failing options (1)

who represented the New Or-

locations,” said Arkansas PSC

and (2), by the holding company

leans City Council in the six-year

chairman Sam Bratton. “It gives

submitting its own plan to FERC

battle over disallowances related

regulators greater control . . . to

for approval.

to the Grand Gulf nuclear power

regulate retail rates and transac-

plant built by Entergy.

tions consistent with a known

(1) by a regional regulatory board

The states prefer alternative (1) or (2). In the first, the preferred 12

“For ratepayers, this provides

plan.”

The Electricity journal

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There are 27 states that imple-

NEWS

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But the other registered holding

ment IRPs for their utilities “and

companies could well be cool to

it’s saving money,” Hempling added. “Planning saves money

the proposal. As Arkansas PSC

over after-the-fact prudence reviews. People are more efficient

bring about a “fairly significant

when they know where the boun-

ness. But Bratton says the

daries lie,” he said.

amendment’s proponents are

chair Bratton admits, it would

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Utility Directors Exit

Trading Directors for Approvals in Tucson?

change” in the way they do busi-

W

hen Arizona Corporation Commission commis-

taking steps to win friends. “We

sioner Marcia Weeks speaks,

with the Mitchell, Williams, Selig

have been talking with regulators

Arizona utilities listen. Case in

& Tucker firm, said Entergy chief

from the other states served by

point: Tucson Electric Power’s

executive Ed Lupberger has sent a

holding company systems,” says

rapidly changing board of direc-

copy of the proposed regional

Bratton. “Their general reaction

tors.

Entergy lawyer Bill Massey,

plan legislation to the other

has been very good. We expect

In early June, then-chairwoman

registered companies and that

they will try to explain to their

Weeks observed in a public hear-

Entergy was to meet with them to

utilities why the proposal will

ing with TEP officials that the

discuss it in late September.

Mas-

utility’s position with regulators

sey says Entergy has heard noth-

might improve if the utility did

ing from the other companies

not have on its board members

since sending the bill to them.

whose tenure dated to the fast-

“It is a cutting edge proposal,”

deal era that led the utility to ruin.

adds Massey, who once worked

(See TEJ, October 1990 at 8.) Com-

for Sen. Dale Bumpers (D-Ark.).

missioner Renz Jennings con-

Bumpers will probably be the

curred.

principal sponsor of the proposal

There was “no linkage” of the

in the coming Senate mark-up.

discussion about the board with

“But it’s going to take some per-

the rate increase the utility had re-

suasion.” Committee chair Ben-

quested, says Jennings.

nett Johnston (D-La.) has not yet

said it would be helpful to focus

received the proposal, though it

on the future, and get away from

has been presented to his staff.

A

focusing on the past.”

sked what Entergy would

benefit not only regulators but

do if the other registered

utilities.”

companies decided to oppose the

‘We just

But three months later, on September 12, those TEP board mem-

As one Capitol Hill insider said

bers resigned. Gone are John

bill, Massey told The Electricity

of the proposal, “The downside is

Schaefer, TEP’s chairman, and

Joumd that Entergys support

that it’s new -

board members Gary Munsinger

depends on the proposal being ap-

don’t know. But the positive

and Thomas Weir. And on the

plicable to all the registered com-

thing about this is that it would

heels of their departure came a

panies. “If it’s just [made ap-

offer some certainty

staff agreement with the utility on

plicable to] Entergy, I don’t think

would be bound by the plan as well as the utility.”

we’ll support it,” he said. “If it’s good legislation then it ought to be applicable to all. Entergy

the devil you

The states

-Kimberly

Dozier

the company’s rate increase. Company insiders say that if the three did not jump, they would have been pushed.

doesn’t want to be in a special category.” October 1991

13