Few customers, negotiated rates don’t factor into definition

Update courtesy of Utility Regulatory News #4036: Although acknowledging that a natural gas gathering and transportation company would be serving only a very small, defined group of customers, the Pennsylvania Public Utility Commission nevertheless has affirmed an earlier ruling in which it determined that the company, Laser Northeast Gathering Co., fell within the definition of a “public utility” under state law. The commission said that an entity’s regulatory status depends not on how many or how few customers it serves, but on whether it indiscriminately holds itself out to serve all members of whatever segment of the public it wishes to serve.

The commission observed that Laser Northeast had expressed a willingness to serve any party that desired its services and that it had pledged to expand its capacity, as needed, to meet any growing demand. The commission said its view was not affected by the fact that the company’s services would be provided under individually negotiated contracts rather than pursuant to a schedule of tariffed rates. According to the commission, reliance on separate contracts was not meant to be “exclusionary” or to allow the company to pick and choose its customers, but instead was simply the most efficient way of setting forth terms and conditions of service for customers whose particular needs could vary widely. The commission cautioned, however, that its decision on public utility status was specific to Laser Northeast only and that the commission has no intention of extending such status to all gas gathering companies as a general rule.

Moreover, the commission pointed out that it had not yet been determined whether Laser Northeast would need a formal certificate of public convenience and necessity. That matter is still under consideration, the commission said. For the full story, subscribe to URN.

Posted: September 16th, 2011 under natural gas, regulation.
Comments: none

Sept. 15, 2011

FOR IMMEDIATE RELEASE

Contact:
Michael Burr

burr@pur.com

320-632-5342
Public Utilities Reports, Inc.

Vienna, Va.: For three years running, Ohio-based utility DPL Inc. has delivered the best overall shareholder performance of any U.S. investor-owned utility company, according to a closely watched report published in the September issue of Public Utilities Fortnightly magazine.

The 7th-annual Fortnightly 40 Report (http://bit.ly/2011F40), sponsored by Accenture, ranked the four-year shareholder value performance of U.S. investor-owned utilities and merchant power companies. The C Three Group of Atlanta, which along with Public Utilities Fortnightly developed the F40 financial model, analyzed the annual reports of 82 power and gas companies to compare a series of shareholder-value metrics — such as profit margin, dividend yield, return on equity, return on assets and sustainable growth.

DPL, parent company of Dayton Power & Light, has held the #1 spot in the Fortnightly 40 report since 2009. DPL’s performance is distinguished by industry-leading returns on equity and assets, as well as strong free cash flow and profit margins. DPL’s perennial strength typifies the top ranks of the F40, according to Michael T. Burr, Fortnightly’s Editor-in-Chief. “Only two names changed in the top 10 ranks. Mirant exited as a result of its merger with RRI Energy, and Questar ascended to #3 by virtue of an asset spin-off,” Burr said. “F40 leaders have shown remarkable stability in performance for shareholders.”

Other movers in the F40 rankings include CLECO, Piedmont Natural Gas, and DTE Energy. DTE’s performance was strengthened by a 10-year program of cost control and operational improvements. In an interview for the report, DTE CFO David Meador told Fortnightly, “Technology deployed right will reduce costs and improve customer service.”

Rankings fell for gas pipeline company EQT and wholesale generator NRG. “EQT was weighed down by heavy spending on shale-gas development, while NRG’s rank was affected by its comparatively low returns on equity and assets,” Burr said.

Companies included in the 2011 F40 ranking include: AES, AGL Resources, Allegheny Energy, Alliant, AEP, Centerpoint, Chesapeake Utilities, CLECO, Delta Natural Gas, Dominion, DPL, DTE, Edison International, El Paso Electric, Energen, Entergy, EQT, Exelon, FirstEnergy, Gas Natural, Laclede, MGE, National Fuel Gas, NextEra, Nicor, Northwest Natural Gas, NRG, NStar, OGE, Piedmont Natural Gas, PPL, PSEG, Questar, RGC Resources, Sempra, South Jersey Industries, Southern Company, Southern Union, TECO, UGI, and WGL Holdings.

The 2011 Fortnightly 40 Report is available to subscribers at www.Fortnightly.com or http://bit.ly/2011F40. Trial subscriptions are available, allowing immediate access to the report.
# # #
PUBLIC UTILITIES FORTNIGHTLY (www.fortnightly.com), published by Public Utilities Reports Inc., in Vienna, Va., is the journal of record for the U.S. utility industry, providing authoritative, in-depth analysis of trends in generation, transmission and distribution of electricity and natural gas. For more than 80 years, Fortnightly has delivered expert analysis to help utility-industry executives and regulators decide where to invest, how the industry will be regulated and what the future holds. Subscription rate: $287/year.

Posted: September 15th, 2011 under M&A, Uncategorized, finance, regulation, utility stocks.
Comments: none

Cites sluggish economy in adopting incremental approach

Update courtesy of Utility Regulatory News #4035: Although acknowledging that its decision would disappoint conservation groups as well as the coordinator of the state’s Energy Efficiency Utility (EEU) initiative as not being sufficiently aggressive, the Vermont Public Service Board said it felt constrained by the state’s slow pace of economic recovery from approving a more robust budget for the EEU program for the next two decades. The board explained, however, that most of the budget was preliminary only and that changes could be made if economic conditions improved.

As proposed, the EEU budget would more than double from $40.1 million in the first program year (2012) to $85.3 million in the last program year (2031). Of that 20-year span, just the first three years are final funding figures. The board stressed that future funding levels will be revisited, and reset as appropriate, based on a three-year review cycle. The board asserted that in considering the budget framework for the next 20 years, it was guided by statutory requirements for EEU measures. The board stated that it was persuaded that the funding levels approved would be adequate to meet those legislative objectives, which include 1) reducing future power purchases; 2) mitigating greenhouse gas emissions; 3) deferring the need to construct new transmission and distribution facilities; and 4) minimizing the cost of electricity. For the full story, subscribe to URN.

Posted: September 13th, 2011 under energy policy, regulation.
Comments: none

Addresses frequency, timing, and eligibility requirements

Update courtesy of Utility Regulatory News #4035: Reviewing advice letters submitted by the state’s three largest electric utilities following a California Public Utilities Commission decision in December that had outlined an auction process for the procurement of energy supplies from small renewable facilities, the commission found that certain modifications were needed in order for the associated solicitations to meet the commission’s vision for its renewable auction mechanism (RAM).

The commission noted that the three utilities - Pacific Gas & Electric Co. (PG&E), San Diego Gas & Electric Co. (SDG&E), and Southern California Edison Co. (SCE) - had proffered advice letters that varied from each other as well as from some of the terms set forth in the commission’s December order. For instance, the commission pointed out, PG&E and SCE had proposed holding only one renewable auction per year, whereas the commission had specifically mandated a total of four auctions over the next two years. The commission also noted that although the December decision had explicitly provided for simultaneous auctions, the utilities had not coordinated their RAM schedules, and SCE had actually recommended that their auctions be staggered purposely. The utilities also disagreed as to what facilities could participate in the auctions and what minimum and maximum capacity limits should apply.

The commission nixed PG&E’s approach to eligibility, which would have restricted participation to new facilities only. Instead, the commission determined that SCE’s terms were preferable in that they would allow both new and existing renewable facilities to participate. As to capacity thresholds, the commission found that certain aspects of both PG&E’s and SDG&E’s proposals were apt. It thus ruled that eligibility would be based on a contract minimum of 1 MW and a project size minimum of 500 kW. However, the commission agreed that projects should be allowed to aggregate, so as to meet the 1-MW contract minimum if their capacity was less than that. Aggregation would be capped at 5 MW, however.

The utilities were instructed to file new advice letters showing compliance with the commission’s directives. For the full story, subscribe to URN.

Posted: September 13th, 2011 under energy policy, green energy, renewables.
Comments: none

Authorizes continued low-income and energy efficiency funding at current levels in the interim

Update courtesy of Utility Regulatory News #4035: In the course of a natural gas rate proceeding involving Consumers Energy Co., the Michigan Public Service Commission (PSC) has determined that, pending its appeal of an adverse ruling from a state appellate court as to the commission’s authority over low-income and energy-efficiency funds (LIEEFs), the status quo should be maintained for Consumers Energy’s LIEEF.

The court holding had pertained to another natural gas local distribution company, Michigan Consolidated Gas Co., but obviously had implications for all utilities that administer LIEEF programs, the PSC said. It explained that the court’s decision had rested on revised language in the state’s electric restructuring law, which appeared to eliminate legislative authority for LIEEF programs. The commission quoted the court as saying that LIEEF measures are not directly relevant to utility regulation, but instead represent a form of social welfare. As such, the court stated, the commission no longer has jurisdiction to oversee LIEEFs. The commission noted that a number of parties had encouraged the PSC to appeal the court’s ruling. The commission said it was still in the process of reviewing the court’s decision and was weighing its options thereto. In contemplation of such an appeal, however, the commission determined that it would be best to continue LIEEF budgets at their present levels, as to do otherwise or to react in haste to the court case could bring irreparable harm to ratepayers. For the full story, subscribe to URN.

Posted: September 13th, 2011 under regulation.
Comments: none