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T H E N E W S I N F 0 C U S
GE Lighting in Hungary, Efficiently
G eneral Electric's lighting arm is stepping up business activ-
ity in Hungary, with aim on ex- panding the compact fluorescent market. Cleveland-based GE Lighting has increased its 56% ma- jority ownership in Tungsram, an established Hungarian light bulb company, to 75%. The added shares will give GE greater clout in and control of the company, which is partly owned by the Hungarian Credit Bank.
"Tungsram has more than met our expectations," said GE Light- ing senior vice president John Opie, explaining the additional in- vestment. In addition to increas- ing its ownership, GE Lighting and its co-owner plan an immedi- ate $47 million investment to im- prove efficiency and develop new products. Since its affiliation with GE, Tungsram has invested heav- fly in high-speed fluorescent and other new lamp capacity.
GE Lighting spokesman John Betchkal says the 12-plant Tungsram system, which employs 14,000 people in Hungary and Austria, will produce many prod- ucts for the European market. However, he says, Tungsram's Nagykanizsa plant will empha- size producing compact fluores- cent bulbs for the world market.
"This plant is the one GE picked to be the world source for the quad tubes that are needed for compact fluorescent bulbs," said Betchkal.
Uncertainty Reigns
Utilities Break Ranks on Transmission, as Competition Issues Gain Attention
T he Edison Electric Institute's sweeping condemnation of
any form of legislatively man- dated transmission access is draw- ing fire from EEI's supposedly unified ranks, said James Rogers, PSI Energy's chairman, president and chief executive officer.
EEI publidy denounced Rep.
Edward Markey's (D-Mass.) bi- partisan transmission access bill, H.R. 2224, and promised to lobby against it. The bill's sponsors say it would clarify - - others say ex- tend - - the Federal Energy Regu- latory Commission's authority under the Federal Power Act to mandate wheeling on a case-by- case basis.
Rogers said he is "putting to- gether a group of utilities that rec- ognize the public policy predicate
that supports the Markey bill, and is prepared to deal with it rather than to accept blindly EEl's 'Hell no, we won't go' approach to Con- gress." The group is said to in- dude Entergy, Northern States Power, Pacific Gas & Electric, Southern California Edison, Wis- consin Electric Power Co. and Do- minion Power.
Rogers and his supporters are considered "~rncoats" by many staunch EEI supporters, accord- ing to one industry source. "They have betrayed certain agreements with EEI that they would stand by what the EEI board decides."
While Rogers does not agree with all parts of the Markey bill, he said he wants to negotiate with Markey's staff to mold the bill into something more palatable for utilities.
"Philosophically, I support the bill, but I disagree with many as- pects [of it]," Rogers said. "If I were drafting a bill, I would clar- ify FERC's authority to order wheeling in specific cases, such as market pricing, mergers, and in situations where there is proof that a utility is using transmission in an anti-competitive manner." Most importantl)~ he said he would include a provision that "requires FERC to mandate recov- ery of stranded investment if it or- ders wheeling."
If the electric industry remains inflexible on transmission access, it will miss a valuable window of opportunity to clarify FERC's au- thority and address stranded in- vestment, before FERC does it of its own accord, Rogers said. Sev-
July 1991 5
T H E N E W S I N F 0 C U S
eral years back, he saw first-hand the results of the gas industry's
Pyrrhic victory, as it refused to de- bate take-or-pay issues when leg-
islation was considered to open pipelines. The legislation was ulti-
mately dropped altogether, but FERC opened the gas systems anyway - - on terms harsher than
the ones Congress had sought,
Rogers said. Rep. Jim Cooper (D-Tenn.) is
among those who have criticized utilities for their unwillingness to
get involved early in the acid rain legislative process. In the end,
Cooper said, lawmakers were faced with environmentalists lob-
bying for tough standards and an industry unwilling, for the most
part, to negotiate. Tough stan- dards were adopted as a result, he
said.
O ther industry sources see a
parallel between the clean air fight and transmission access.
Political pressures are building for access, but the industry's "just say
no" stance on transmission may ultimately damage utilities, say
some Capitol Hill observers. Rogers' suggestions on transmis-
sion access would probably be welcomed warmly in the House
and Senate, added one congres- sional observer.
Rogers said he tried to commu- nicate the virtues of negotiation
and the philosophical probity of the Markey bill in conversations with EEI President Thomas Kuhn, but to no avail.
Similar pleas from John Rowe, president and chief executive of the New England Electric System,
have met with the same response. "I'm an apostate on the issue, and [EEI] knows that," Rowe said in an interview. "I basically would
favor the changes in Markey's bill, based on efforts underway by
New England regulators. It
makes sense. "I think EEI has accurately rep-
resented the position of its larger members and the majority of its members," Rowe added. "I sim- ply disagree."
The Markey bill "needs a lot of modification before it
will be acceptable to our company. The bill goes
way beyond what is I I necessary . . . .
--William T. McCormick, Jr. Consumers Power Co.
Rowe said most New England utilities are indifferent to Markey's bill because they al- ready have a fairly open-access transmission system. Transmis- sion transactions in the area are
coordinated by the New England Power Pool and various utilities. Utilities are allowed to protect their systems, including native
load. "Exactly what protections they
are allowed - - and what consti- tutes native load - - have yet to be determined," as part of a regional
transmission agreement being de- veloped by New England utilities,
state regulatory bodies and inde- pendent power producers, Rowe said.
R owe said the New England
transmission protocol, once complete, could be used as a model for open-access wheeling nationwide.
Other utility executives are join- ing Rogers and Rowe in meeting
the wheeling issue head-on. Wil- liam McCormick, chairman and
chief executive at Consumers Power, criticized the Markey bill,
but said his utility may be willing to work with congressional staff
to draft a more agreeable wheel- ing bill. "We're more amenable
[than EEI] to working with [con- gressional] staff to change the breadth and scope of FERC's au- thority as written in the pro-
posal," McCormick said in an in- terview.
The Markey bill "needs a lot of modification before it will be ac-
ceptable to our company. The bill goes way beyond what is neces-
sary in order to assure a level playing field in connection with
reform of the Public Utility Hold- ing Company Act," said McC-
ormick, who also heads the Util- ity Working Group, which
supports changing PUHCA. "In the context of any particular
FERC rate proceeding, we believe they have the authority to require transmission. We would promote some clarification of FERC's power to order wheeling," he con- tinued. McCormick says Markey's bill overreaches in al-
6 The Electricity Journal
T H E N E W S I N F 0 C U S
lowing FERC to order wheeling as a way to encourage least cost
planning, address environmental concerns, or for any other reason FERC finds in the public interest.
"The bill's focus must be nar-
rowed," McCormick said. A narrower focus still may not
win over the majority of investor- owned utilities on wheeling.
"Folks are scared of transmission access," said Thomas Gibson,
spokesman for the Electric Reli- ability Coalition, which opposes
changing PUHCA. The momen- tum of wheeling legislation in the
House is unnerving pro-PUHCA reform utilities because the
PUHCA title in energy legislation "is a natural point of attachment
for transmission access," Gibson said. Transmission access legisla-
tion has transformed PUHCA changes into "a tar baby from
which they wish they could get loose," he said.
The idea of widening FERC's power to mandate wheeling has
garnered support from many con-
sumer advocate groups, and
some segments of the electricity industry. The American Public Power Association admonished
FERC to "just exercise it" - - refer-
ring to FERC's power to mandate wheeling. "The Commission should abandon - - in [the Depart- ment of Energy's] own words - -
its conservative view of its own authority," the public power
group said. "However, since FERC seems to believe it cannot
act, [we] propose that it either test its present authority - - or seek au- thority through legislation."
Registered holding companies, however, don't see a need for mas-
sive new efforts by FERC on trans- mission, said holding company at-
torney Charles Patrizia of Paul, Hastings, Janofsky & Walker.
"FERC already has some author- ity to order transmission through
conditioning" of mergers, and there is "already a lot of voluntary
transmission going on. We should let the existing system
work."
Transmission access legislation has transformed PUHCA changes into "a tar baby" from which utilities wish they could get loose.
--Thomas Gibson, Electric Reliability Coalition
The Southern Company under- scores Patrizia's sentiment. Allen
Franklin, Southern Company Ser- vices Inc. president, recently told
FERC that giving that agency in- creased powers to mandate access
would strip utilities of decision- making on how best to meet their obligation to serve, and may inad- vertently threaten transmission system reliability. Franklin recom- mended that FERC stick to its cur- rent case-by-case decision-mak- ing, without expanded powers under the Markey bill.
"I am not impressed by the no- tion that FERC needs more au-
thority [to mandate wheeling] in- stead of providing incentive for
voluntary agreements" by allow- ing utilities to make a profit from
transmission, Patrizia added. He also opined that FERC does not
have the time to deal with trans- mission on top of complex natural
gas and merger issues. "They have enough on their plate," he
said. The APPA counters that, to the
contrar)~ FERC must become more active in wheeling. FERC's
abrogation of wheeling authority has resulted in widespread
abuses by transmission owners, APPA said.
"Few utilities any longer deny that some type of transmission ac-
cess is necessary to promote or protect competition in the electric
industry," added the Environmen- tal Action Foundation. "The
same theme echoes regularly from Wall Street, which will not fi-
nance new wholesale generation projects without assurance that
the products can get to market."
y et utilities resist efforts to
strengthen wheeling author- ity at the federal or state level,
hoping to herd the transmission debate "down a jurisdictional
'black hole' "between Congress and FERC, EA said.
Advocates of opening the nation's transmission lines are likely to fail in a bid to exploit the Federal Power Act to order non-
discriminatory wheeling, pre- dicted attorney Harvey Reiter.
July 1991 7
T H E N E W S I N F O C U S
Reiter observed that section 207 of the Federal Power Act allows
state commissions to lodge a com- plaint with FERC if the quality of
transmission service is inadequate or insufficient. If FERC finds the
state PUC's complaints valid, it must order "proper, adequate or sufficient service to be furnished,"
in the words of the statute.
T he Vermont Department of Public Service and Public
Service Board have asked for greater access under section 207 as part of the Northeast Utilities- Public Service of New Hampshire
merger pending before the FERC, said Reiter, who represents the
Vermont regulators. "What you're confronting here
is precisely the controversy that [Rep. Edward] Markey (D-Mass.)
is trying to resolve," said one ad- vocate for transmission access.
"Some people think [the Federal Power Act] authorizes FERC to
order wheeling when denial of
wheeling is anti-competitive, but
the appeals courts are split on this. People can be harmed by
monopolistic refusals to wheel, and have no recourse under the
FPA. "This is exactly what happens
when there is no precise legisla- tion" on wheeling," the attorney
continued. "Reiter has to take his clients through a series of hoops and Catch 22 situations and mil- lions of dollars worth of com- plaints," only to settle for limited access through merger conditions.
While it's still too early to fore- tell an outcome, the next few pro- cedural steps seem clear. First,
there may well be transmission amendments offered when the
omnibus bill marked up by the Senate Energy and Natural Re-
sources Committee (S. 1220) comes to the Senate floor, though
the likely outcome of any such move seems unclear.
On the House side, the Energy and Power Subcommittee will no
doubt consider a transmission provision in the omnibus House
energy bill the subcommittee staff
will write this summer for sub-
committee and then full commit-
tee markup in the fall. The chances for a Markey-like trans- mission amendment seem much
better here then in the Senate, though far from a shoo-in.
One looming problem for pro- PUHCA, anti-transmission re- form utilities in the House is the inevitable linkage of the two is-
sues there. In the lower body, it could well come down to: "No transmission reform, no PUHCA reform."
Perhaps the key change in all that is going on is that the once-
monolithic utility view that trans- mission is too complex and risky
an area for policy change is losing potenc~ even within the industry itself. The consensus that has de-
veloped around the notion that transmission can be dealt with - - however complex its technical problems - - now includes the state and federal regulatory com-
munity, the independent power industry, public power, industrial
and other energy consumer groups, and a handful of utilities.
This "sea change" could signal a readiness to do something about both transmission and PUHCA sooner than most insiders were
guessing at the outset of the
102nd Congress. - - Kimberly Dozier
Acid Test for Nuclear
Japan's Push for 40 New Plants Faces Anti-Nuke Reaction
N IMBY, the "Not in my back yard" syndrome that has
proven a formidable barrier to sit-
ing of power plants and other public works in the United States, is at work in Japan and may be- come a major obstacle for Japan's electric utility industry.
The forcing event in framing Japan's energy future may well be the Japanese Ministry of Interna- tional Trade and Industry's (MITI) projection of the need for
8 The Electricity Journal
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