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New EIA report on Industry Mergers

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Happy Holidays! See you in the next thousand years…
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UFTO Note – New EIA report on Industry Mergers

An early Christmas present! This week’s issue of the ” Electric Utility Restructuring Weekly Update” arrived via email today, instead of Friday. (If you’re not a subscriber, I recommend signing up for it. It’s also available on the Internet at
http://www.eren.doe.gov/electricity_restructuring/weekly.html)

This item caught my eye. It’s an impressive compilation of data on utility mergers. the Update’s writeup came from the Sustainable Energy Coalition “Weekly Update,” Dec. 19, 1999

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In a report titled, “The Changing Structure of the Electric Power Industry, 1999: Mergers and Other Corporate Combinations,” the Energy Information Administration finds that competition is causing the number of mergers to increase rapidly. There have been twenty-two mergers completed by investor-owned utilities (IOUs) over the last three years and another twenty-five mergers will most likely be completed by the end of 2000. In addition, by the end of 2000, approximately fifty-one percent of all IOU power production will come from the ten largest IOUs. The twenty largest IOUs will have seventy-three percent of all IOU power generation capacity. Since 1997, IOUs have been divesting or have divested over 300 power plants, usually selling at prices that are 1.5 to 2.5 times their book value. Nuclear power plants have sold for far less than their book value.

The report can be retrieved [as a PDF file] at:
http://www.eia.doe.gov/cneaf/electricity/corp_str/corpcomb.html.

The complete executive summary from the report is included below.

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The EIA has a wealth of information about the industry.
Home page: http://www.eia.doe.gov/

One particularly interesting resource:
— Status of State Electric Utility Deregulation Activity Monthly
A map/chart of the status of deregulation activities by state.
http://www.eia.doe.gov/cneaf/electricity/chg_str/regmap.html
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DOE/EIA-0562(99)

The Changing Structure of the Electric Power Industry 1999:
Mergers and Other Corporate Combinations

December 1999

Executive Summary

Since the passage of the Energy Policy Act of 1992, which opened the U.S. electric power industry to the start of competition,1 investor-owned electric utilities (IOUs) have been under pressure to cut costs, to become more efficient, and to expand their products and services. Mergers, acquisitions, asset divestitures, and other forms of corporate combinations have become widespread as IOUs seek to improve their positions in the increasingly competitive electric power industry.

Since 1992 IOUs have been involved in 26 mergers, and an additional 16 mergers are pending approval. One effect of these mergers is that the industry is becoming more concentrated. In 1992 the 10 largest IOUs owned 36 percent of total IOU-held generation capacity, and the 20 largest IOUs owned 56 percent of IOU-held generation capacity (Figure ES1). By 2000, the 10 largest IOUs will own an estimated 51 percent of IOU-held generation capacity, and the 20 largest will own an estimated 73 percent.

Emerging Transmission Market Segments (IEEE Article)

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The article cited below is from the January issue of Computer Applic in Power, and for non-subscribers interested in T&D issues, it happens to be available in its entirety on the IEEE website: http://teaser.ieee.org/pubs/mags/9905/rahimi.html

I thought you might find it useful as an overview of the various ways transmission systems are being organized around the world.

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Who’s coming to the IEEE PICA Meeting in Santa Clara this month (May 17-20)??

Let me know, and maybe we can get together, or at least say hello at the conference.
Complete details available at: http://www.pica99.org
>>>>>>>>>>>>>>>>>>>>>>>>>>
Remember QuickStab? (UFTO Note March 22) Dr. Savalescu will be at PICA, and would be pleased to offer a private demonstration. Give him a call!
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(I just joined IEEE, and am beginning to appreciate the wealth of information it provides to the power industry.)
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IEEE Computer Applications in Power January, 1999 Volume 12 Number 1 (ISSN 0895-0156)

Meet the Emerging Transmission Market Segments
Farrokh A. Rahimi & Ali Vojdani

Around the globe, the electric industry is undergoing sweeping restructuring. The trend started in the 1980s in the U.K. and some Latin American countries, and has gained momentum in the 1990s. The main motivation and driving forces for restructuring of the electric industry in different countries are not necessarily the same. In some countries, such as the U.K. and the Latin American countries, privatization of the electric industry has provided a means of attracting funds from the private sector to relieve the burden of heavy government subsidies. In the countries formerly under centralized control (central and eastern Europe), the process follows the general trend away from centralized government control and towards increased privatization and decentralization. It also provides a vehicle to attract foreign capital needed in these countries. In the United States and several other countries where the electric industry has for the most part been owned by the private sector, the trend is toward increased competition and reduced regulation.

This article presents an overview of the evolving structural models and the main structural components of the emerging deregulated electricity industry. An analysis of the central structural components, namely the independent system operator (ISO) and the power exchange (PX), is provided and used as a basis for structural classification with a view to the supporting computer application needs.

Public Interest R&D

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This paper was just published in Utilities Policy, on a timely subject which is of interest to many of you. The authors will have reprints available, and have supplied me with an electronic copy of the (15 page) manuscript, from which I extracted the following excerpts. The complete paper is 10 pages as published.

Contact: Carl Blumstein, 510-642-9588, cjblumstein@lbl.gov

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“Public-Interest Research and Development in the Electric and Gas Utility Industries,”
Utilities Policy: Volume 7, Issue 4, 21 April, 1999, pages 191-199
Carl Blumstein, University of California Energy Institute
Stephen Wiel, Lawrence Berkeley National Laboratory

An unintended consequence of the restructuring of the electricity industry in the U.S. has been a sharp decline in expenditures for R&D by investor-owned utilities. This paper examines how the public interest may be damaged by this decline in R&D expenditures and discusses some of the strategies that could be employed to mitigate the damage.

The restructuring of the electricity industry has been accompanied by a sharp decline in R&D expenditures by investor-owned utilities (IOUs), which have fallen by more than 45% between 1993 and 1996. The trend in the U.S. … is consistent with trends in other countries where the electricity industry has been or is being restructured.

A key driver of this trend is competitive pressures to cut costs. “While cuts are occurring across the board, RD&D departments are particularly vulnerable because in most cases research projects are not considered essential to the operation. In addition, the value of RD&D projects are difficult to quantify and often seen as a long-term investment. These trends are particularly prevalent for IOUs positioning themselves to increase profits for shareholders.” (Schilling and Scheer 1997) While, in retrospect, this trend does not seem surprising, it was certainly not an intended consequence of restructuring. Intentions notwithstanding, policy makers are now confronted with the questions: (1) how will this decline affect the public interest and (2) if some of the effects are adverse to the public interest, what mitigating steps, if any, should be taken?

This paper is intended to stimulate discussion on these questions by examining some of the issues in detail. First, we define public-interest R&D and illustrate the definition with some examples. The examples also give some idea of what may be lost if utility R&D expenditures continue to decline. Then we examine some of the issues that would be raised by efforts to mitigate the decline in utility expenditures for public interest R&D. These issues, which we explore using a series of examples, are funding, governance, and scope. Finally, in a brief conclusion, we discuss our concern that public interest R&D is likely to suffer some serious damage if action is not taken. However, we believe that there are likely to be many workable solutions to the problems we pose.

Technological change is an important contributor to economic growth and R&D is an important contributor to technological change. Any sharp decline in R&D expenditures is, at the least, a cause for concern. On the other hand, restructuring is moving the business of electricity generation decisively toward competition. If history is a guide, this competition will be conducive to innovation. New R&D investments may be forthcoming from the competitors or their suppliers. Thus, concern with the current decline in R&D expenditures should focus on the R&D, if any, that will not be adequately provided by the competitive market. Especially at risk are R&D funds for projects that, from a societal perspective, have measurable public benefits but that private markets will probably be unable to support because these public benefits cannot be appropriated by private firms.

In current discussions about utility industry restructuring this type of R&D has come to be known as public-interest R&D. Among the areas where the benefits of public-interest R&D may be important are health, safety, environment, energy efficiency, and “pre-commercial” technical information. Many R&D projects have both private and public benefits.

Strategic options [to provide] post-restructuring R&D support mechanisms [are discussed], with a description of funding, governance and scope, followed by an analysis of pros and cons. The four options offered are – Direct Industry Control, – Industry Directed Not-For-Profit, – Publicly Directed Not-For-Profit, and – Direct Government Control. These four are not mutually exclusive and do not begin to exhaust the possibilities.

We … conclude … that none of the options described above is sufficient by itself to provide for public-interest R&D after restructuring. In the past, public-interest R&D was sustained by a mixture of public and private, regulated and unregulated, and federal and state institutions and support mechanisms. Today, in the midst of restructuring, it is not surprising that some of these arrangements are being disrupted given the profound institutional upheavals now happening in the energy industry. Public-interest R&D is likely to suffer some serious damage if actions are not taken to deal with these disruptions.

The purpose of this paper is to stimulate discussion concerning what actions to take. The situation is complex, but the problems are by no means insoluble. Indeed, we think there are likely to be many workable solutions. Our hope is that discussion will begin to identify some of the better solutions and will contribute to the evolution of a new mixture of public and private, regulated and unregulated, and state and federal institutions and support mechanisms that will enable public-interest R&D to continue providing benefits after restructuring.

Utility Restructuring Weekly Update

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A reminder that this weekly service is available from DOE. Anyone can request to be added to the email distribution list. Notice the availability on DOE’s website.

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Subject: Utility Restructuring Weekly Update
Date: Fri, 22 Jan 1999 16:46:48 -0500
From: Jennifer Bergman
To: Ericka Goss

January 22, 1999
Utility Restructuring Weekly Update

This weekly information has been compiled by Energetics, Inc. for the U.S. Department of Energy. Questions or comments on subscribing to the weekly should be directed to either Jennifer Bergman, Energetics, jbergman@energeticsinc.com, or Diane Pirkey, U.S. Department of Energy, DIANE.PIRKEY@HQ.DOE.GOV. All other inquiries should be directed to the specific organization in question.

The Weekly Update is available on the Internet at
http://www.eren.doe.gov/utilities/utilityres/weekly.html

National/Federal
State legislators from around the country are expressing their opposition to Congressional activity that will preempt state efforts in the area of electric industry restructuring. Speaking on behalf of the National Conference of State Legislatures, . . . . . .

WEBSITES:
Yahoo Utilities Company News: http://biz.yahoo.com
PMA Daily Power Report: http://www.powermarketers.com
EnergyOnline: http://www.energyonline.com

****************************
Jennifer Bergman
Energetics, Incorporated
501 School Street, SW
Suite 500
Washington, DC 20024
(202)479-2748 ext. 108
Fax (202)479-0229

CURC Annual Conf. 11/98

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California Utility Research Council
Annual Technology Conference
November 2-4, 1998
Costa Mesa CA

Background Information —————–

——- Who is CURC? ——-
CURC (California Utility Research Council) was established by the California Legislature (Public Utilities Code, Sections 9201-9203) in 1984 to:

– Promote consistency of utility RD&D programs with state energy policy
– Prevent unnecessary duplication of research efforts
– Encourage the free exchange of information related to utility RD&D projects where appropriate
– Identify opportunities for research coordination between energy utilities and for joint funding of RD&D projects of benefit to California ratepayers

CURC Board includes representatives from the CPUC, CEC, PG&E, SDG&E, SCE, and SoCalGas. [Recently, a new category of “Associate Member” was created, and includes CIEE, CMUA, EPRI, GRI, LADWP and SMUD.]
Website —- http://www.curc.org

——- Restructuring and Public Interest R&D ——-
Restructuring of the electric and natural gas industries is having a dramatic effect on the energy RD&D landscape in California. Previously, most of this work was funded by ratepayers and managed by the four largest investor-owned California utilities: PG&E, SCE, SDG&E, and SoCalGas. Supplemental funding for California RD&D interests was provided by GRI, EPRI, and Federal Agencies.

Restructuring is providing new opportunities for collaboration of energy RD&D efforts. Recent California legislation (AB1890) has made available $62.5 million per year for public interest energy RD&D to be managed by the California Energy Commission (CEC). Utilities will continue to fund ratepayer RD&D activities, although on a lesser scale. It is also expected that there will be an increasing interest in shareholder-funded technologies by energy companies seeking a competitive advantage. Finally, restructuring will have a direct effect on programs offered by EPRI, GRI, and perhaps even Federal Agencies.

——- Purpose ——
– To help attendees better understand how all of the energy RD&D pieces fit together in a restructured environment.
– To provide participants with an overview of technology trends and energy RD&D collaboration activities which benefit California.
– A first hand look at how the California PIER (Public Interest Energy Research), Renewables, and Energy Efficiency programs are being implemented.
– Opportunities to network directly with peers and funding agencies.

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Highlights from the Conference

– Keynote : “California’s Electric Restructuring: a Stunning but Secret Success”
Phil Romero, Chief Economist, Office of the Governor, outlined how rapidly the transformation of California’s electric industry has proceeded and the significant benefits already being realized. He summarized the “deal” struck between all players on stranded assets and rates (recently upheld by the defeat of Proposition 9), and replied to some of the criticisms — there are consumer choice, numerous competitors, and longer term benefits of a renewed generation base, new energy services, and the chance for California to be a winner in world energy service markets.
One surprise was the high price paid in auctions of the fossil power plants. On average, they have sold for 2.5 times more than anticipated. The CEC had expected a “fire” sale. Book value seems to be irrelevant–the underlying issue seems to be the cost to rebuild at a greenfield sight.
California needs to prepare for a population that is expected to double within the next 25 years.

– Keynote: Telecomm RD&D Transition
Peter Magill, Bell Labs reviewed what happened to Bell Labs as AT&T was broken up in the 1980’s, and how the R&D evolved. Under the regulated monopoly, R&D was decoupled from the needs of the business. Interest and dollars dipped and work became much more targeted under the local operating companies and long distance provider. Now Lucent, the new owner of Bell Labs, dedicates 1% of revenues to an agile and strategic research program, and regards it as critical to their success. He noted the complex array of technologies and markets that are converging now in the telecomm industry, and outlined the opportunities for energy utilities to play. In particular, they have no legacy networks to overcome, and have the chance to leapfrog technologically, avoiding a “me-too” approach.

— National R&D Needs and Programs

– EPRI – an overview of EPRI’s continuing process of providing more options, and exploring new ways of providing services.

– GRI – FY 1999 R&D Plan is on their website (www.gri.org). GRI has just done a major reorganization with business units focused on customer segments, and offering staff services on a competitive basis. GRI’s traditional funding mechanisms are disappearing, so they are looking at new business models.

– Livermore and Idaho National Labs – representatives presented overviews of their programs. LLNL sees their advanced computing for weapons modeling as a capability that can make contributions in energy, and expect hydrogen to play a major role in the future. INEEL offers capabilities in environmental management and systems integration, and Lockheed Martin has strong incentives to work with industry and commercialize technology under its management contract.

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— California Utility R&D Perspective

1998 is the last year of ratepayer funded research by electric utilities in California, as the transition proceeds (with the CEC public interest programs–see below). Corporate R&D departments have been disbanded, and the function decentralized completely into separate business units, for each to pursue according to their own priorities. Human and financial resources are declining dramatically, and there is little or no coordination among departments.

PG&E – In 1999, R&D funding will come from foreign utilities, the CEC PIER program, co-funding, and department operating funds. R&D must compete with maintenance projects for funding, and is expected to be about 1/4 of 1998 levels. Current programs of interest include: Information technology, Environmental impacts and compliance, Real time data for customer decisions, Life extension, Pipeline rehabilitation, Fitness for service–better utilization of assets, and Underground construction activities. Needs include: Reducing the time to bring technologies to the field, Producing products in a shorter timeframe, Looking to others for fundamental research. PG&E expressed concern over loss of in-house expertise. There is a need to collaborate and work with other utilities/research organizations toward reaching common goals.

San Diego Gas & Electric – R&D funding is now focused on technology development and application for core business. A four to five year time horizon for a new product is too long. Programs must focus on the near term – one to two years. SDG&E has interest in programs that increase system reliability, improves performance, and minimizes service.

So Cal Edison – In 1997, SCE spent $30 million in R&D related activities. The 1998 budget was $1.5 million. It has disbanded its research department. Research activities are being conducted by the business units and Edison Technology Solutions, which is a new unregulated unit competing for R&D funding, notably the CEC PIER program. With strong affiliate transaction restrictions in effect, ETS and SCE must keep very separate, and carefully handle any contacts between them.

Sacramento Municipal Utility District – Unlike the IOUs, SMUD’s R&D programs are stable. They are spending 3.7% of their revenues on R&D. SMUD is interested in photovoltaics for parking lots and rooftops and renewable programs. SMUD’s R&D funds are committed, but they welcome collaborations. They will use their funds, others will have to use their funds. Current areas of interest include: landfill gas, fuel cells, microturbines, and wind.

All the utilities represented at this meeting are looking for third party funding—federal, state, partnering arrangements. Utilities can supply test beds for new products and systems, and are interested in collaborative research.

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— Environmental R&D

California EPA – is a family of regulatory bodies, including the Air Resources and Water Resources Boards. The Innovative Clean Air Technology Program (ICAT) has been set up to help new technologies thru the “valley of death” by providing funding, guidance, and certification for new technologies trying to become commercial.

South Coast Air Quality Management District – In So. Calif, 88% of NOx and two-thirds of VOC emissions from mobile sources. The SCAQM spends nearly $5 Million per year to advance new technology solutions to air quality–priorities include fuel cells, electric/hybrid vehicles, and stationery VOC source reduction. They look for cost-sharing, and will accept unsolicited sole-source proposals.

CEC Environmental R&D – The CEC has its own role in supporting energy related environmental R&D focused on improved siting and regulatory decisionmaking. Topics include upper atmosphere NOx transport modeling, avian mortality and wind turbines, and power plant water sources.

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CEC – Public Interest Energy Research (PIER)

(Extensive information is available at http://www.energy.ca.gov/research

Questions regarding PIER should be directed to Mike Batham
of the Commission’s Energy Development Division at:
916-654-4548, MBatham@energy.state.ca.us

PIER is for “public interest” not for regulated utility or competitive research, though it is recognized that the boundary is fuzzy.

Stage I is nearly complete, and Stage II is about to start.

In Stage I, three 1998 solicitations have been completed, with 83 projects approved for funding totaling $53 million through June 1999 (FY).
– One-time Transition Project Funding, for up to one year to continue ongoing (ratepayer-funded) public interest energy RD&D projects
– 1st General Solicitation funding, for projects in Environmental, Advanced Generation and Renewable Research
– 2nd General Solicitation funding, in End Use Efficiency and Strategic Research

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UFTO has an electronic version of the complete listing of these projects that was handed out at the conference. It is available on the UFTO website, or on request. Send an email to pierprojects@ufto.com
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Other accomplishments include establishment of the “Small Grants” program ( $2.5 Million for grants up to $75K each for concept development–announcement due soon, with grants early in ’99). Also, membership in seven EPRI targets has been approved ($1.5 Million).

PIER has a14 member Policy Advisory Council with representation of industry, universities, government and environmental groups.

Stage II Funding is organized around six Program Areas, with a staff team for each area. The team leaders, which in some cases are interim at this time, are listed in the respective program area.

– Industrial/Agricultural/Water — John Sugar, 916-654-4563
– Residential and Commercial Buildings — Nancy Jenkins, 916-654-4739
– Energy-Related Environmental Research — Bob Eller, 916-654-4930
– Environmentally-Preferred Adv. Gen. — Mike Batham, 916-654-4548
– Renewables — George Simons, 916-654-4659
– Strategic — Tom Tanton, 916-654-4930

Each team has compiled a list of high-level issues, based on input from focus groups, the Policy Advisory Council, and the Commissioners. These draft issues are still a work-in-progress as the teams proceed with the next steps: (1) identification of program goals and objectives; (2) prioritization of technical issues corresponding to the high-level issues; and (3) funding options and strategies. (Note: The complete document is available online and as an Acrobat pdf file).

CEC claims it has “streamlined” the contracting process. The Commissioner admitted that the contracts offered previously were difficult to accept. A team has recently reviewed and modified the terms and conditions (T&C’s). The T&C’s now used are in the best interests of the program—not the State’s. Modifications will be very difficult to get in the next solicitation. It was strongly recommended that the T&Cs be reviewed before preparing a bid, and be ready to accept them if selected for an award.

The next solicitation opportunity is tentatively scheduled to be released late winter (likely in February). A series of solicitations will address clearly defined target areas. There is no policy in place for reviewing, approving, or handling unsolicited proposals, and they are distinctly not encouraged. Would-be applicants probably would do well to contact CEC program staff informally to explore their ideas.

Criteria include: eligible organizations, public interest benefits in California, technical merit, credible team and schedule, policy fit — scores by independent evaluators are weighted, added and ranked. Matching funds can be zero if benefits are 100% public–must increase in proportion to non-public benefits.

NOTE: A proposal does not have to be submitted by a California company, nor does it have to be performed in California. There is no “favorable weighting” for California companies in the PIER program. The program, however, must clearly benefit California rate payers. The program requires matching funds. There will be a PIER workshop in January or February.

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The Other Public Benefit Programs

There are two other major “public benefit” programs that were established under AB1890 restructuring that represent a much larger $ resource than PIER — Renewable Technology, and Energy Efficiency. Presentations and discussions explored how these programs bridge to or overlap with PIER.

— Renewable Technology Program (www.energy.ca.gov/renewables)

AB1890 provided for $540 Million ( of the “Public Good Charge” to be collected from the IOUs) to support existing, new and emerging technologies, and SB90 codified recommended allocation and distribution mechanisms. Basically, there are four separate “accounts” (existing, emerging and new technologies, and consumer-side), all of which provide some form of “buy-down” for renewable generation, with no participation in any form of RD&D. The purpose is to encourage the renewables industry to accept and promote new renewable technology.

— Energy Efficiency (www.cbee.org)

The Calif. Board for Energy Efficiency (CBEE) is a Board established by the CPUC to administer these funds–roughly 10 times the budget for PIER. Under “standard performance contracts, payments are made for measurable energy savings achieved by installation of specific energy-efficiency projects. Savings must be measured and installations verified under standardized program rules. There are also “market transformation” programs providing commercial downstream incentives, LED traffic signal standards, commercial surveys, and a demonstration programs for a premium efficiency relocatable classroom. Nearly 1/3 of the funds will go towards residential programs, e.g. contractor training and labeling programs. Contact Mark Thayer, 619-594-5510

— Bridging PIER (R&D) and the Renewables/Efficiency Programs
California Institute for Energy Efficiency http://eetd.lbl.gov/CIEE/
(CIEE plans, funds and manages a statewide energy R&D program)

CIEE outlined some their own programs, and offered ideas to bridge the gaps between R&D and these two programs. PIER can’t support demonstrations unless they “add to the knowledge”, and the CBEE needs more latitude for emerging technology. PIER needs to awareness of market needs. There is a need to prove cost effectiveness to market participants, etc.

An important element for bridging the gap is the multi-year program strategy that enables orderly transitions from R&D to demos to commercial use. Multi year projects should have advisory committees, direct involvement by market representatives, and deliberate plans for disseminating results in appropriate venues. CIEE also recommends that research be done directly on market processes themselves–barriers, incentives and decisionmaking.
Contact: Jim Cole, CIEE Director, 510-486-5380, jwcole@lbl.gov

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Calif. Trade and Commerce Agency, Office of Strategic Technology (OST)
Pasadena CA http://goldstrike.net

Steve Jarvis, 626-568-9437, sjarvis@goldstrike.com
Richard Keeler, ” ”

This agency provides resources, support, funding and access to various state and federal programs to help California companies to be successful and compete globally. OST partners with other organizations that seek to help the formation of partnerships and enable industry to move forward. A total investment 5 year investment approaching $1 Billion has been realized, leveraging funds from federal, state and private sources.

Companies seeking help must meet strict criteria as businesses (i.e. not just technology), much as venture capital investors require.

OST programs include the Calif Technology Investment Partnership, Regional Technology Alliances, Calif. Manufacturing Technology Program, Calif. Information Infrastructure, and NSF Research Centers.

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Other agenda items included:

A series of presentations of a sample of PIER funded research projects:
– Waste water and agricultural technology demonstrations
– Monitoring and Diagnostic system for Commercial Buildings
– Global Climate Change–scenarios and analysis
– Low emission Gas Turbine Combustor for Distributed Gen.
– Photovoltaic system implementation

Customer view of RD&D Needs
– Calif. Manufacturers Assoc.
(want certain end in 2002 of ratepayer funded R&D)
(suggest a number of energy conservation items for work til then)
– Applicant Design of Gas and Electric Distribution systems
(evolving to include private ownership and O&M, with many
resulting legal, regulatory and technical issues)

Panel Discussion on Improving Collaborative RD&D Processes

Past Successes of CEC and IOU research (under the old framework)
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Fed. Restructuring Proposal

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Forwarding note received this morning from DOE coordinators for the SEAB
Task Force on Electrical System Reliability.
————————————————————–
| ** UFTO ** Edward Beardsworth ** Consultant
| 951 Lincoln Ave. tel 650-328-5670
| Palo Alto CA 94301-3041 fax 650-328-5675
| http://www.ufto.com edbeards@ufto.com
————————————————————–

Subject: Administration’s Electricity Legislation
Date: Wed, 1 Jul 1998 8:37:00 -0400
From: paul.carrier@hq.doe.gov

On June 26 the Administration forwarded its proposed electricity restructuring legislation to the U.S. Congress. The proposed Comprehensive Electricity Competition Act along with a section-by-section analysis can be found on the Internet at: http://www.DOE.GOV/ceca/ceca.htm.

The Act’s provisions on reliability are based on the recommendations of the Department of Energy Task Force on Electric System Reliability.

Utility Restructuring Weekly Update

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A reminder that this weekly service is available from DOE. Anyone can request to be added to the email distribution list. (Only a small portion of the current list is shown in the note below.) Notice the coming availability on DOE’s website.

I have an electronic file of back issues from 5/97 on, if you need them.

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Subject: Utility Restructuring Weekly Update
Date: Fri, 13 Mar 1998 17:05:00 -0500
From: Jennifer.Bergman@ee.doe.gov

**********************************************************************
Please note: Effective March 23rd the Weekly will be available on the Internet at http://www.eren.doe.gov/utilities/weekly.html. The March 20th and March 27th editions of the Weekly will not be e-mailed. We expect to resume e-mail delivery for the April 3rd edition.

March 13, 1998

Utility Restructuring Weekly Update

This weekly information has been compiled by Energetics, Inc. for the weekly should be directed to either Jennifer Bergman, Energetics, Jen_Bergman@Energetics.com, or Diane Pirkey, U.S. Department of Energy, DIANE.PIRKEY@HQ.DOE.GOV. All other inquiries should be directed to the specific organization in question.

National/Federal:
An advisory committee, comprised of leaders from the electric and natural gas industries, Congress, Federal agencies, utilities, and consumer groups, recently released a report on federal and state restructuring policy and guidelines. “Restructuring the Electric Utility Industry: A Consumer Perspective,” prepared by the Consumer Energy Council of America Research Foundation  consumers, particularly small commercial and residential users. The following are some of the recommendations made in the final report: (1) Congress should pass restructuring legislation soon; (2) consumers should be allowed to stay with their current provider and pay cost-based rates during the transition period of stranded costs recovery; (3) consumers should have access to and receive the programs should be continued; and (5) market power issues and solutions should be studied further and recommendations presented. The report is available from CECA/FA at (202) 659-0404. CECA/RF Press Release, March 4th

Rep. Stearns is developing a restructuring bill that would give states According to Stearns, “Congress should be careful not to mandate re-regulation… We should empower the states to enact measures providing their customers with retail competition and choice.” The legislation is said to include a reciprocity provision that would prohibit utilities from competing for customers if their own state was not open for customer choice. This bill is seen by some as an alternative to Rep. Schaefer’s bill and could possibly gain more bipartisan support because it does not mandate a date certain for retail choice. Congress Daily, March 9th

33,000 out of the 10 million electricity customers have signed up with new energy suppliers. Of these 33,000 customers, only 14,000 are residential and small commercial customers. It seems as if many of the California consumers are listening to the Southern California Edison ads that say “Do Nothing” about competition. EnergyOnline, March 9th

Merger:

The Justice Department approved the proposed merger between Enova Corp. and Pacific Enterprises. As a part of the merger, which would form Sempra Energy, San Diego Gas & Electric will sell two of its fossil-fuel plants.

Stranded Benefits:

The U.S. Department of Energy and the California Energy Commission signed an agreement to promote the development energy-efficiency technologies. This plan is the first of its kind and it is being energy sources continues in a restructured electricity industry. The agreement, which is in a Memorandum of Understanding, focuses on energy-efficiency and renewable-energy technologies and encourages the development of advanced electricity generation systems. PowerPlus, March 9th

Principles that would guide buyers and sellers in a competitive marketplace. Under AWEA’s green marketing principles, green power products must include power from wind, solar, biomass, and geothermal resources. There should be no repackaging of electricity from renewables that are “already being paid for by utility ratepayers” and existing and new entrants must compete, with no preference given for Electricity Daily, March 5th

A new fast food restaurant in Phoenix offers its patrons an item not found on a typical menu: use of an electric vehicle charging station. Although this is not the first area restaurant to offer such station, it is the first one to offer both conductive (plug-outlet technology) and inductive (not requiring a metal-to-metal connection) charging. This $1 million, 115-seat McDonalds is the product of a collaborative effort between the fast food chain and the Arizona Public Service Co. to design a restaurant that is energy-efficient and environmentally friendly. Among its features are an energy management system to control cooling/heating, lighting, and ventilation; solar light tubes; occupancy sensors; photosensors to adjust to lighting needs; skylights; and state-of-the-art glazing. These features are projected to reduce energy costs by 25 percent. This store is one of a few McDonalds prototypes in the nation that is optimized for the climate of region in which it is located. Knight Ridder/Tribune Business News, March 9th

States:

Arizona

Negotiations continue in the effort to generate an intergovernmental agreement between the Salt River Project (SRP) and the Arizona Corporation Commission (ACC) to ensure that the rules of the retail market apply to all electricity providers. Currently, long-held agreements between investor- owned utilities (IOUs) and SRP define the various suppliers’ service territories. In competitive markets, however, those boundaries will fade, and the IOUs fear that SRP will invade their service territories without providing reciprocal access to its market. According to sources, both the ACC and SRP are committed to creating an agreement, but disagreement continues over enforcement issues. These discussions are taking place in the context of legislative action on an electric restructuring bill. The bill, which passed the Arizona House last week, calls for full competition in SRP’s service territory by 2000, although the ACC’s blueprint for reform does not envision direct access for the IOUs until 2003. The measure was sent to the Senate, which is expected to begin committee review within the next week. Electric Power Alert, March 11th & March 9th

Colorado

The latest Colorado bill to deregulate the electric industry fared no better than those that have preceded it. Rep. Gary McPherson (R) shelved his bill to allow commercial and residential consumers to choose their electricity provider by 2002 because he did not have enough votes to move it out of the House committee. The next step is to prepare a compromise bill by combining it with one previously introduced by Rep. Paul Schauer (R) that stalled in committee last month. If the compromise bill fares no better in the General Assembly, a measure to prepare a report on the effects of deregulation by December 1999 will be the next step. Progress toward deregulation continues to move slowly in the state; comparatively low electric rates and many opponents, including rural electric associations and cooperatives, are cited as reasons. Knight Ridder/Tribune Business News, March 9th

Florida

State Senator Charlie Crist (R) recently announced his bill to bring choice to the state’s electricity consumers in three years. The bill would require utilities, including municipal power agencies and rural electric cooperatives, to submit restructuring plans detailing what they would charge for generation, transmission, distribution, metering, and billing to the Pubic Service Commission by year’s end. Without a co-sponsor or a companion bill in the House, it is not likely the bill will go beyond the committee hearings. Knight Ridder/Tribune Business News, March 9th

Illinois

The relationship between investor-owned utilities (IOUs) and their affiliate companies will be the subject of an extensive series of hearings by the Illinois Commerce Commission (ICC) at the end of the month. The ICC is instructed by Illinois’ newly enacted open competition law to determine proper boundaries for these relationships. The Illinois Citizen Utility Board (CUB) and Enron
Corp have already gone on record indicating that they are concerned about the impact IOU relationships with sister companies may have on a competitive market. Citing a recent court decision, the CUB argues that the relationships between affiliates creates a barrier to entering the market. Enron Corp is concerned with making sure that they pay no more than an affiliate for services like transmission and distribution. According to sources, Commonwealth Edison (ComEd) and other Illinois-based IOUs will argue that denying them a strong relationship with their affiliates will put them at a disadvantage in competing with IOUs from other states that may not be regulated as strongly. ComEd also plans to testify that electric competition will increase customer welfare and that regulation by the ICC should be light-handed. Electric Power Alert, March 11th

Indiana

An electric industry deregulation bill died in the Indiana state legislature, a victim of divergent interests within the state’s investor-owned utility community. The bill, which would have allowed full competition by 2004, was supported by companies such as American Electric Power and Cinergy Corp. These companies currently have relatively little market share in Indiana and believe that competition would create new opportunities to expand their business. Other more established utilities, including Northern Indiana Public Service Co and Indianapolis Power & Light Co, opposed the bill, sources say, because they already control large portions of the state’s market and see little advantage to competition. Electric Power Alert, March 11th

Massachusetts

In a single order, the Department of Communications and Energy granted approval of restructuring plans for three of the state’s utilities: Cambridge Electric Light, Commonwealth Edison, and Canal Electric. With this order, all but two of the Massachusetts utilities have received final approval on their restructuring plans. The remaining two, Massachusetts Electric and Fitchburg Gas & Electric Light, have both received interim approval on their plans. PowerPlus, March 12th

New Hampshire

New Hampshire Governor Jeanne Shaheen (D), Public Service Co of New Hampshire (PSNH), and consumers have begun private talks to work out a resolution to the electric industry reform deadlock that has gripped the state for much of the year. Issues being debated include the timing and extent of rate cuts and stranded cost recovery. Participants remain hopeful that there will be some sort of resolution, but do not anticipate meeting the July 1, 1998 deadline for open access envisioned by the Public Service Commission (PSC). If the talks do not produce a timely resolution, PSNH has promised to continue with its legal action claiming that the PSC’s February 1997 order implementing choice at the behest of the state legislature constitutes an unconstitutional taking of property because it opens the utility’s transmission and distribution and does not compensate its loss through full stranded cost recovery. Tired of the reform deadlock, House members passed a bill February 12 authorizing the PSC to issue securitization for independent power producer buy downs. Other investor-owned utilities in the state have bypassed the reform talks and begun to file settlements calling for full stranded cost recovery and divestiture of fossil fuel assets in return for rate reductions and open access by July 1. Electric Power Alert, March 11th

New York

The New York Public Service Commission (PSC) has approved the 1998 Demand Side Management (DSM) Plan submitted by the Long Island Lighting Company (LILCO) with certain caveats. Funding for the plan was approved at $10.6 million. The utility plans to operate well as low-income programs. In its ruling, the PSC indicated concern that LILCO’s DSM plan provides only limited market transformation opportunities and does not address how the plan will be coordinated with the statewide DSM programs to be funded with the new system benefit charge (SBC) or how its low-income program night be jointly developed and operated as a gas and electric program. As a result, administrator being designated by the Commission, and other interested parties in order to develop and coordinate further market transformation initiative and joint low-income programs. New York Public Service Commission, March 4th

Pennsylvania
Under a bill recently introduced by Rep. Lloyd (D), all Pennsylvanians would be able to choose their power supplier by January 1999, up to two years earlier than mandated by the state’s restructuring law. This bill has the backing of consumer and environmental groups, however the state’s utilities oppose it. Lloyd’s bill is currently being cosponsored by 15 others. Knight Ridder/Tribune Business News, March 10th

Texas

Texas-New Mexico Power Company is beginning a pilot program for a small town in south-central New Mexico. Starting May 1, the utility’s  supplier for a two-year period.
EnergyOnline, March 4th

Vermont

Momentum towards electricity restructuring in Vermont has been slowed as a result of a March 1 decision by the state’s Public Service Board (PSB) to grant Green Mountain Power Corp (GMP) a mere fraction of the rate increase it was seeking. The PSB decision, experts believe, demonstrated that the current system of regulatory oversight can protect consumers, validating the concerns of many House members that deregulation may diminish those protections. “The rate case effectively kills restructuring for the session,” said a source with the Associated Industries of Vermont. “The politics look absolutely abysmal.” While ratepayers have hailed the decision to award only $5.6 million of the $22 million requested by GMP, the utility is vehemently opposed and has promised to file an appeal to the PSB or go directly to the state Supreme Court. According to the utility, the PSB erred in its finding that GMP was imprudent in signing a contract with Hydro Quebec in 1991. As a result of the decision, GMP’s bond rating has been downgraded, leaving the utility in a precarious financial position. Electric Power Alert, March 11th

Virginia

The state Senate approved an amendment to the restructuring legislation that would expand the requirements of competition to include both generation and transmission facilities. This amendment also calls for both generators and power marketers to participate in the development of an independent system operator. The House is now considering this amendment. PowerPlus, March 12th

WEBSITES:
Yahoo Utilities Company News: http://biz.yahoo.com
PMA Daily Power Report: http://www.powermarketers.com
EnergyOnline: http://www.energyonline.com

CURC Tech. Exchange Conf. Brochure

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Here is the detailed brochure recently mailed out for the CURC Technology Exchange Conference, in case you didn’t receive it in the mail.

Please let me know if you’ll be there. I do plan to attend on behalf of UFTO, and will report what I see and hear.
California Utility Research Council
Technology Exchange Conference

November 3-5, 1997
Hyatt Regency La Jolla, San Diego, CA

Sponsored by: California Utility Research Council (CURC)

Co-Sponsored by
Electric Power Research Institute
Gas Research Institute
U. S. Department of Energy

— Who is CURC?
CURC (California Utility Research Council) was established by the California Legislature in 1981 to:
• Promote consistency of utility RD&D programs with
state energy policy
• Prevent unnecessary duplication of research efforts
• Encourage the free exchange of information related to
utility RD&D projects, where appropriate
• Identify opportunities for research coordination between
energy utilities and for joint funding of RD&D projects
of benefit to California ratepayers

CURC Board includes representatives from the CPUC, CEC, PG&E, SDG&E, SCE, and SoCalGas.

— Background
Restructuring of the electric and natural gas industries is having a dramatic effect on the energy RD&D landscape in California. Previously, most of this work was funded by ratepayers and managed by the four largest investor-owned California utilities: PG&E, SCE, SDG&E, and SoCalGas. Supplemental funding for California RD&D interests was provided by GRI, EPRI, and DOE.

Restructuring is providing new opportunities for collaboration of energy RD&D efforts. Recent California legislation (AB1890) has made available $62.5 million per year for public interest energy RD&D to be managed by the California Energy Commission (CEC). Utilities will continue to fund ratepayer RD&D activities, although on a lesser scale. It is also expected that there will be an increasing interest in shareholder-funded technologies by energy companies seeking a competitive advantage. Finally, restructuring will have a direct effect on programs offered by EPRI, GRI, and perhaps even DOE.

— Purpose
The 1997 CURC Technology Exchange Conference will help attendees better understand how all of the energy RD&D pieces will fit together in a restructured environment. The conference will also provide participants with an overview of technology trends and energy RD&D collaboration activities which benefit California. Attendees will get a first hand look at how the California PIER (Public Interest Energy Research) program will be implemented. Just as important, individuals will have an opportunity to network directly with peers and funding agencies.

— Who Should Attend
The conference will be of major interest to engineers, scientists, investors, inventors, RD&D policy makers, government representatives, product and business development specialists.

— General Information

The conference will be held at:
Hyatt Regency La Jolla, 3777 La Jolla Village Drive,
San Diego, CA 92122

Early registration will be available on Monday, November 3 from 4:00 to 7:00 p.m. Registration on Tuesday, November 4 will begin at 7:30 a.m. along with a continental breakfast. The conference will begin at 8:30 a.m. on Tuesday, November 4 and will conclude at approximately 4:30 p.m. on Wednesday, November 5.

Accommodations
Attendees are responsible for making their own reservations before October 12, 1997 (after this date the rates will increase or rooms may not be available). Mention the conference by name to ensure receiving the group rate:
Hyatt Regency La Jolla
Phone: (619) 552-1234 Fax: (619) 552-6066
Group Room Rate: $144 single/double occupancy
Reservation Deadline: October 12, 1997

Airline Discount
United Airlines is offering discounted fares to attendees flying into San Diego International Airport (20 minutes from the Hyatt La Jolla). For reservations and information, call 1-800-521-4041 and refer to meeting #511HD. These discounts are available only through United’s Meeting Desk and apply to travel between October 31 and November 8, 1997.

Registration
The conference fee is $350 and includes the conference preceedings, continental breakfast, coffee breaks and lunch each day, as well as a reception on Tuesday evening with poster papers.
To register, complete the registration form and mail it with your payment. Checks should be made payable to Southern California Gas Company. Unfortunately, we cannot accept credit cards or purchase orders for this conference. If registering by fax and sending a check separately, be sure to identify the attendee when sending the check.
Cancellations: No refunds will be given for cancellations received after October 28, 1997.

Poster Session
Space will be available for Poster Presenters to present during the reception on Tuesday evening and during lunch on Wednesday (with setup scheduled for Tuesday morning). The fee for poster presenters is $500 which includes one full conference registration. For further information, please contact the Conference Manager, Maureen Barbeau at (650) 855-2474 Fax: (650) 855-2166.

Spousal Attendance
No formal spousal programs are planned. However, for spouses accompanying attendees to San Diego there will be an informal continental breakfast on Tuesday and Wednesday mornings with information available about San Diego attractions. Please indicate on the registration form if your spouse will accompany you. Spouses are invited to attend the reception on Tuesday evening.

An informal golf outing will be held on Monday, November 3, 11:30 am, at the Coronado Municipal Golf Course, followed by a no-host dinner at a local restaurant. Coronado is located just a few minutes drive from the airport and downtown. Reservations for the event must be received by Friday, October 17, by mailing a check for $37.50 payable to “Coronado Municipal Golf Course” to Kurt Kammerer, c/o SDG&E, P.O. Box 1831, San Diego, CA 92124. Questions can directed by E-Mail to kkammere@sdge.com or by calling (619) 696-1891.

Technical Information
David Berokoff, The Gas Company
(213) 244-5340 Fax (213) 244-8242

Meeting and Logistical Information
(650) 855-2474 Fax (650) 855-2166

———————————————————-

PRELIMINARY AGENDA

All Day – Optional Social Outing (Golf) on Coronado Island
4:00 – 7:00 p.m.Conference Registration

Tuesday, November 4
7:30-8:30 AM-Registration, Continental Breakfast
8:30-9:00 AM-Opening Remarks-Frank A. Spasaro (CURC Chair)
(PIER Program Evolution, Overview of Objectives,
Strategic Plan)
David L. Rohy, Commissioner,
California Energy Commission
Representative,
California Public Utilities Commission
9:45-10:00 AM-Break
10:00-12:00 PM-California Utility RD&D Programs
(Utility RD&D Program Highlights, Technology Trends,
Collaboration Opportunities.)
Frank Spasaro, Southern California Gas
Jim Reilly, Southern California Edison
Kurt Kammerer, San Diego Gas & Electric
Bud Beebe, Sacramento Municipal Utility District

12:00-1:15 PM-Lunch, Keynote Presentation

1:15-3:00 PM-Other California Energy RD&D Programs
(Program Focus, Technology Trends, Collaboration
Opportunities)
Jim Cole,
California Institute for Energy Efficiency
Renewable Technologies
Terry Winter,
California Independent System Operator
Representative, Southern California Air
Quality Management District
3:00-3:15 PM-Break
Maurice Gunderson, Nth Technologies
John Burns, Scripps Consulting Group
Joseph Walkush, Science Applications
International Corp. (invited)

5:00-8:00 PM-Reception, Poster Sessions

Wednesday, November 5
7:30-8:30 AM-Continental Breakfast, Poster Sessions
8:30-9:30 AM-Keynote Presentation: Future Technology Needs & Trends
9:30-10:45 AM-National Energy RD&D Funding Agencies
(RD&D Program Highlights, Technology Trends,
Richard Rudman, Elec. Power Research Institute
Bill Burnett, Gas Research Institute
Representative, U.S. Department of Energy
10:45-11:00 AM-Break
11:00-12:30 PM-The Customer Perspective
Ralph Cavanagh,
Barbara Barkovich, California Large
Energy Consumers Assoc. (invited)
Richard Brent, Solar Turbine Systems
Richard Sperberg, On-Site Energy
Carl Weinberg, Weinberg & Associates
Ron Ishii, Technology Committee Chairman, CADER

12:30-2:00 PM-Lunch, Poster Sessions

2:00-4:30 PM-PIER Program Implementation Status

4:30 PM Conference Concludes

———————————————————-
REGISTRATION

(Please complete and return a copy with your payment)

CURC Technology Exchange Conference
November 3-5, 1997
Hyatt Regency La Jolla, San Diego, California

(Please print or attach a business card)

Name ___________________________________________________
Preferred Name for Nametag _____________________________
Title _______________________________________
Organization ________________________________
Address _____________________________________
City/State/Zip ______________________________
Telephone ___________________________________
Fax ___________________________________

Registration Fees
___ Attendee-$ 350
___ Poster Presenter-$500 (includes one conference registration)
___ Speaker-$ 0 (fee waived, one speaker per presentation)

Credit cards and purchase orders are not acceptable.
Checks should be made payable to Southern California Gas Co.

___ Check attached ___ Check being mailed separately

If registering by fax and sending check separately, BE SURE TO IDENTIFY THE ATTENDEE WHEN SENDING THE CHECK.

Refunds will be given for cancellations received on or before Oct. 28, 1997.

___ My spouse will accompany me.
___ I am interested in playing golf on Monday.
___ I have a disability and may require accommodation to fully participate. (You will be contacted by the conference manager.)
___ I have the following dietary requirements:

Please return this form or a copy with your check payable to
Southern California Gas Co. to:

Maureen Barbeau
Electric Power Research Institute
3412 Hillview Avenue
Palo Alto, CA 94304
(650) 855-2474
Fax (650) 855-2166
mbarbeau@epri.com