Utilities

Arkansas PSC Says Repeal Mandated Deregulation

In December, the Arkansas Public Service Commission told the General Assembly that continued movement toward deregulation of the state's electricity market "is not in the public's best interest." The PSC recommended that the Legislature either suspend further steps toward deregulation until 2010 or repeal laws mandating deregulation altogether. The commission conducted a six month investigation on the effects of deregulation in Arkansas, and concluded that in five of six projections, an open market would result in higher electric rates, 13.4 percent higher for customers of Entergy, Arkansas' largest power supplier.

Tennessee Governor Receives Energy Task Force Report

Gov. Don Sundquist received the Interagency Energy Policy Work Group's final recommendations for a comprehensive energy policy of Tennessee. "The availability of reliable and affordable energy impacts (effects) every Tennessee business and citizen," Sundquist said. "This report lays the groundwork for a state energy policy that ensures reliable supply, encourages efficient use and protects our natural resources." The key area of the report centers on merchant power plants. In August 2001, the governor's office directed TEDC to stop accepting applications for merchant plants pending the Work Group's recommendations. The group recommended that the suspension be lifted and that the state begin a two-year demonstration project for the siting of merchant power plants. Under the demonstration project, a limited number of applications would be accepted. All applications would include an assessment of cost and benefits, information on potential effects to existing power infrastructure, and all required environmental permit applications.

FERC Orders Price Controls

When a utility has dominant market power, they can charge any price they want. The Federal Energy Regulatory Commission knows that better than anyone and stepped in last quarter to control energy prices in markets dominated by Atlanta-based Southern Company and Entergy Corp. of New Orleans. With a new screening method that changes the way federal regulators look at wholesale price setting, the agency could be set to implement similar restrictions on utilities across the country. FERC changed its screening process from a hub-and-spoke analysis to a supply margin assessment. The new supply margin assessment, enables the FERC to determine the geographic market and then establishing a threshold based on whether a utility has a dominant position in that market. The screening process will be done for every utility at least once every three years.

S&P Cautious With Dynegy and Energy Industry in General

Officials with Standard & Poor's said in January that it is maintaining its current ratings outlooks and Credit Watch listings on companies in the merchant energy industry, including a negative Credit Watch on Dynegy, Inc. Houston-based Dynegy is facing several obstacles in addition to being under the microscope from S&P. The company raised $500 million in a stock sale in December, but pending litigation related to the failed Enron merger and a collapse in investor confidence from it are certainly problems Dynegy and other energy merchants such as Calpine, El Paso, Williams and Mirant must deal with.

Another New Name for a Southern Utility

The old Reliant HL&P, a name given for the even older Houston Lighting & Power Company, is about to get another new name. Officials with Reliant Energy approved in December the formation of a new holding company called CenterPoint Energy. CenterPoint Energy will spin off Reliant Resources as part of the process of dividing old Reliant Energy into two separate companies. Shares of Reliant Energy will be converted into shares of CenterPoint Energy, which will trade under the CEP symbol on the New York Stock Exchange.

TVA Seeks Public Input on Continued Nuclear Plant Operations

The Tennessee Valley Authority is seeking public input on its proposal to extend the operation of the Browns Ferry Nuclear Plant in Athens, Ala. Browns Ferry was TVA's first nuclear power plant and the first in the world that topped 1000 megawatts. The three-unit plant began operations in the mid-1970s. Today, Units 2 and 3 are operational and are on 40-year leases. TVA wants to extend their operations by 20 years to 2034 for Unit 2 and 2036 for Unit 3. The utility also wants to reactivate Unit 1, which closed in 1985 during a review of the authority's nuclear power program. You can give your opinion on the matter by going to www.tva.gov.

AEP Buys Enron Wind

In December, American Electric Power purchased the 107-turbine Indian Mesa Wind project located in Fort Stockton, Tex. The 160-megawatt wind power project supplies power to City Public Service, San Antonio's municipal power agency. The wind turbines are the largest being manufactured today. AEP purchased the wind farm for $175 million. AEP recently completed work on its own Texas wind farm, the $160 million, 150-megawatt Trent Mesa project located near Abilene.

TXU Signs Big Deal

Dallas-based TXU Energy reported it has reached a five-year agreement with Michigan-based Taubman Centers. The $125 million deal makes TXU the exclusive energy partner for Taubman's shopping centers in 13 states. Taubman Centers is a real estate investment trust that develops, owns and buys regional shopping centers. The company currently owns and operates 31 centers.

TXU Sell's U.K. Distribution, Two Power Plants

London Electricity Group has purchased TXU's U.K. distribution business and the Texas utility's 50 percent stake in 24seven for $2 billion. Officials with TXU said its European distribution business is the largest in the United Kingdom and consists of the assets and wires that deliver electricity through a 55,800 mile (90,000 kilometer) network in East Anglia and southeast England. In an unrelated story, TXU has sold two Texas gas-fired electric plants for $443 million to Chicago-based Exelon Corp. The two plants, located in the Dallas/Fort Worth Metroplex, generate more than 2,000 megawatts of electricity.

FPL Announces Plant Expansions

Florida Power & Light Co., a subsidiary of FPL Group Inc., announced in January that it will add 1,100 megawatts of capacity to its Manatee generating site. Florida Power is also considering adding generating capacity to its Indiantown plant. The expansion of the two plants would boost generating power for the Juno Beach, Fla.-based utility by 10 percent.

Florida Power to Build Plant

Florida Power recently announced it will build a natural gas-fired power plant at its Hines Energy Complex in Polk County near Lakeland. The 500-megawatt plant should come online in 2005. The newly announced plant would be the third built by Florida Power at the Hines complex. The first came online in 1999 and the second will be operational in 2003.