Invokes use of a wind proxy

Update courtesy of Utility Regulatory News #4054: Reviewing the methodology used by Rocky Mountain Power for its purchases of energy and capacity from wind-based qualifying small power production facilities (QFs), the Wyoming Public Service Commission has adopted a permanent avoided-cost pricing method for the utility. Referring to it as a “partial displacement differential revenue requirement” approach, the commission said that the new method involves two primary changes from previous avoided-cost rate formulas. First, capacity deferrals for all wind QFs will be premised on a wind proxy and will no longer be limited to 50 megawatts per year. Second, the timing and amount of such deferrals will depend on the need for and the costs of a wind unit or a combined-cycle combustion turbine, as reflected in the utility’s most recent integrated resource plan. In rejecting a counter-proposal for “front-loaded” capacity payments to wind QFs, the commission said that such treatment would be tantamount to rate basing of the facilities, a measure that is reserved solely for utility-owned generating resources and thus would be inapt for wind QFs. According to the commission, use of a wind proxy should produce QF rates sufficient to promote growth in the wind power industry in the state. For the full story, subscribe to URN.

Posted: January 27th, 2012 under ratemaking, renewables, wind power.
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Ruling permits Columbia Gas to switch auction protocols.

Update courtesy of Utility Regulatory News #4037: In authorizing a natural gas local distribution company (LDC), Columbia Gas of Ohio, to begin following a standard choice offer (SCO) bidding structure rather than continue adhering to its longtime standard service offer (SSO) process, the Ohio Public Utilities Commission has in essence paved the way for the LDC to depart from the natural gas supply market.

Ohio has traditionally deemed an LDC that switches from the SSO auction method to the SCO format to be “exiting” from the natural gas merchant business. Under the SCO approach, every customer eligible to participate in the state’s choice program is assigned to a supplier based on competitive bidding outcomes, but with all SCO customers actually paying the same monthly rate as other SCO customers, regardless of who their individual supplier may be. With an SSO auction, on the other hand, the LDC solicits bids for gas supplies on behalf of its customers, such that the LDC itself remains the customer’s listed supplier. The commission stated that its previous experience in switching to SCO-based auctions had produced favorable pricing results for consumers, and it rejected contentions from the Office of Consumers’ Counsel that residential customers generally receive no quantifiable cost savings or other benefits from SCO procedures.

The commission explained that there was no direct evidence that SCO protocols inhibit market entry by competitive suppliers or depress participation by smaller-volume customers. The commission said that education and awareness are always key to successful solicitations, whether auctions are conducted according to SCO or SSO principles. For the full story, subscribe to URN.

Posted: October 18th, 2011 under natural gas, retail competition.
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Commission says its job is to regulate, not micromanage.

Update courtesy of Utility Regulatory News #4037: Although acknowledging that a corporate outsourcing arrangement between a natural gas local distribution company (LDC) and an independent consultant was of a significant magnitude, the Maryland Public Service Commission nevertheless has determined that negotiation of the contract was within the LDC’s managerial prerogative and that it did not require formal preapproval by the commission.

The LDC, Washington Gas Light Co., had entered into the agreement with Accenture for Accenture to perform a number of administrative tasks, ranging from customer service to human resources to information technology to supply procurement to finance and accounting. The Office of People’s Counsel (OPC) had protested the arrangement, arguing that the breadth of services included rendered it tantamount to turning over the reins of a public utility to an unregulated entity. The OPC expressed special concern about diminutions in service, particularly with respect to residential customers. The OPC further worried about the economic risks that would be borne by ratepayers should Accenture default. The commission, however, observed that Accenture employees would be bound by the same tariffed service requirements as the LDC’s own personnel, and thus Accenture’s assumption of responsibility for the listed functions should not impede the delivery or reliability of service.

The commission also related that its own job is to regulate, not manage, let alone micromanage, utilities within its jurisdiction. According to the commission, the roles assigned to Accenture under the contract are of just the nature that fall solely to utility management, thus making prior approval of the agreement by the commission unnecessary. For the full story, subscribe to URN.

Posted: October 18th, 2011 under management, natural gas.
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Finding nuclear case less compelling, commission caps allowable costs through 2013.

Update courtesy of Utility Regulatory News #4037: Citing last spring’s earthquake in Japan, ongoing economic woes, and faltering Congressional enthusiasm for carbon regulation, the North Carolina Utilities Commission has retreated from its prior showing of strong support for an electric utility’s proposal to further develop and expand its nuclear facilities.

The utility, Duke Energy Carolinas, had announced plans to augment its Lee Nuclear Station in South Carolina. When the project was first proffered, the utility had averred that growing demand, as well as the likelihood of carbon legislation within the foreseeable future, made it prudent to add more nuclear resources to the utility’s generation portfolio. However, given the questions about nuclear safety that had arisen since the Japan earthquake, and noting that Duke Energy has suffered continued load loss as a result of the moribund economy, the commission found that the utility’s present nuclear plans might be too ambitious.

Moreover, the commission pointed out that recent changes in the political composition of Congress made carbon regulation a more distant possibility rather than a nearer-term certainty. Consequently, the commission, while still allowing Duke Energy to proceed with certain aspects of its plan, decided that the project should have a cost cap, which the commission set at $120 million for the four-year period ending December 31, 2013. For the full story, subscribe to URN.

Posted: October 18th, 2011 under carbon regulation, nuclear.
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DEADLINE: Friday, Sept. 30, 5:00 p.m. Eastern time

Fortnightly has opened the nominations process for this year’s Top Utility Lawyers honors.

You’ll find the nomination form here …
And the FAQ document here …
And last year’s Top Lawyers article here.

Nominations are invited from executives at utility and energy companies, regulatory agencies, and trade associations serving the U.S. electric and gas industries. Eligible nominees include attorneys at law firms and private practices, as well as in-house counsel. Nominations from law firms, self-nominations, and intra-company nominations are considered on an informational basis only and will not be counted as votes.

Thanks for your nominations!

Posted: September 26th, 2011 under energy policy, finance, regulation.
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