As the deadline for deregulation draws nearer in California, two players in the state have taken action to deal with the changes. The Los Angeles Department of Water and Power (DWP), Los Angeles, California, U.S., announced that it would lay off 2000 employees as part of a restructuring plan that would lower electric rates. To the north, the Pasadena (California) City Council drew up an ordinance detailing several steps it may take to be competitive in the new marketplace.
According to DWP's new general manager, David Freeman, DWP's restructuring is planned to decrease the utility's debt and make it more competitive. The plan calls for reducing residential electric rates by 5% and commercial rates to market level by January 2002. Part of the restructuring effort may also call for dividing the utility into three operating companies--generation, transmission and distribution.
The Pasadena ordinance, which was presented at a November 3 meeting, includes a call to establish a temporary rate surcharge to help pay an estimated US$156 million in "stranded investment" debt associated with previously made energy investments. The ordinance also establishes a non-bypassable, state-mandated public benefits charge of 1.85% until 2002. This would be in addition to 1% already collected as part of the current electricity rate. Another part of the ordinance called for reducing the transfer of profits from the Water and Power Department to the city's general fund to US$5 million per year and suspending until 2002 a surtax paid by customers since 1968 for funding under-grounding of utility lines. The last part of the ordinance called for phasing in competitive rate restructuring, only if necessary, over the final four years leading up to 2002, instead of over five years as originally recommended by the City Council Deregulation Committee.
The estimated net impact of the Pasadena actions on a typical 500 kWh residential customer will be 11.5% per month; net impact on a typical small commercial customer will be 10.9%; and net impact on a typical large commercial customer will be 14.2%.
Electricity Customers Prepare for Choice A recent study by Coopers and Lybrand indicated that 55% of customers in England are either committed to switching electricity suppliers or are at least open to the idea. Existing suppliers are assured of retaining only 29% of their customers, according to the study. The participants stated that price as well as range of products were important. One quarter of the respondents also indicated that the identity of the supplier was the most important item, indicating that companies with a visible name brand but no experience in selling electricity could be successful entrants in the market.
Restructuring Workshops Offered The Industrial Technology Institute (ITI) has been awarded a US$126,500 contract by the Department of Energy (DOE) to develop and deliver multi-state industry workshops on electric utility industry restructuring. These workshops are designed to help companies reduce rates through restructuring and reduce costs through energy efficiency improvement and peak load management.
The 12-month project will analyze industry electric costs and demand patterns. It will develop guidelines for estimating potential costs savings and will develop state-specific workshop outreach materials. The project will deliver workshops in Michigan and other Midwestern states. The project will include train-the-trainer materials so that restructuring workshops can be delivered by state energy office staff.
Iberdrola Participates In Coelba Bid Spain's Iberdrola utility led a consortium of buyers who turned in a winning bid to take a 65.6% stake in Brazil's Bahia state power company, Coelba. The consortium, which also included Brazil's largest pension fund, Previ, and a unit of Banco do Brazil, turned in a bid of approximately US$1.6 billion.
Powernet Victoria Sold The high-voltage transmission network in Victoria, Australia, known as Powernet Victoria, has been sold to GPU, Inc. for AUS$2.72 billion (US$2 billion). GPU is a Persippany, New Jersey, U.S.-based company that owns Jersey Central Power and Light, Metropolitan Edison and Pennsylvania Electric.
Utilities Solicit Equity Participation in Project New Century Energies, Inc.'s (NCE) operating subsidiaries, Southwestern Public Service Co. (SPS) of Amarillo, Texas, and Denver-based Public Service Co. of Colorado (PSCo), are soliciting third-party use and equity participation in an asynchronous transmission interconnection between their electrically separate systems.
NCE issued a request for proposals for third-party participation in the project. Hagler Bailly, a consulting firm, will coordinate evaluation of the proposals. The proposal deadline was Oct. 31, 1997.
The proposed tie-line would provide asynchronous electrical power flow between SPS's system in the Southwest Power Pool region of the United State's eastern transmission grid, and PSCo's transmission system in the Rocky Mountain region of the Western Systems Coordinating Council, or western transmission grid. The line is expected to be in service on or before Dec. 31, 2001.
During Federal Energy Regulatory Commission hearings in 1996 on their merger, SPS and PSCo agreed to solicit third-party interest in the interconnection, including equity participation and transmission use. The utilities also agreed to conduct open-participation studies to identify two or more "final transmission line alternatives" that were technically feasible and that satisfied applicable reliability guidelines.