Message-ID: <21642107.1075855460384.JavaMail.evans@thyme> Date: Tue, 18 Dec 2001 13:00:00 -0800 (PST) From: alliance@eei.org To: ipp-news-contacts@listserver.eei.org Subject: Alliance of Energy Suppliers Express Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit X-From: "The Alliance of Energy Suppliers" X-To: Generation and Power Marketing Executives X-cc: X-bcc: X-Folder: \Vincent_Kaminski_Jan2002_1\Kaminski, Vince J\Deleted Items X-Origin: Kaminski-V X-FileName: vkamins (Non-Privileged).pst [IMAGE] Alliance of Energy Suppliers Express-December 18, 2001 Federal Affairs ***IRS Tax Ruling Resolves Problem With Taxation of Generator Interconnections*** A new IRS tax ruling, issued following a two- to three-year effort by EEI and its member companies, will resolve a major problem related to the taxation of new independent power generators or merchant plants connecting to the grid, the Institute reported this week. The agency's action exempts the transfers of an independent generator's interties, used to connect their generation facilities to a utility's grid, from the Contributions in Aid of Construction (CIAC) tax on the connection if a long-term interconnection agreement exists. "We welcome the ruling made by the IRS," commented EEI President Tom Kuhn. "This ruling helps break down a significant barrier to providing much needed new generation and will help to facilitate the development of a more competitive electricity market." EEI's Alliance of Energy Suppliers, which represents merchant generators, worked closely with the Institute to achieve this important tax victory. The group called it "an important step in the development of an independent power sector." ***Institute, Alliance Ask That FERC Vacate or Stay November Orders With New Market Power Screen, Exposure to Retroactive Refunds*** EEI and its Alliance of Energy Suppliers have requested that FERC vacate or stay recent orders establishing a revised market power screen and a new market-based rate tariff condition raising a significant potential for retroactive refunds. They asked that the Commission instead issue a single notice of proposed rulemaking explaining the proposals and providing interested parties a reasonable opportunity to comment upon "the critical, interrelated issues raised on both of these proceedings." The parties' motion was filed in response to two orders issued by FERC on November 20. In the first (Dockets ER96-2495 et al), the Commission proposed to apply a new Supply Management Assessment (SMA) screen to market-based rate tariffs as they come up for triennial review, and set out detailed remedial measures for applicants not passing the screen. In the second (Docket EL01-118), FERC effectively eliminated the refund effective date requirements with respect to specific complaints filed under section 206 of the Federal Power Act, raising a significant potential for retroactive refunds. "Both proceedings involve critical issues regarding the availability of market-based rates and the potential remedies the Commission would apply in a market-based rate context," EEI and the Alliance underscored. And, they pointed out, "both proceedings introduce significant uncertainties about the continued availability of market-based rates that are magnified when their potential cumulative and interactive impacts are considered." ***US Appeals Court Rejects Challenges to Order 2000, Saying RTO Participation Voluntary Utility Decision*** A federal appeals court has dismissed challenges to FERC's Order 2000 in which petitioners asserted that the RTO initiative exceeded the regulators' statutory authority and resulted from arbitrary and capricious action. The court found that the challenged requirements were voluntary, and that petitioning utilities failed to demonstrate that they were injured by the rule. It accordingly dismissed the petitions for lack of jurisdiction. A three-judge panel of the US Court of Appeals for the DC Circuit acted last week in a set of consolidated cases, Public Utilities District No. 1 of Snohomish County, Washington v. FERC (No. 00-1174, et al). EEI joined several member companies and other parties in challenging the regulators' action. In raising the challenges to FERC's December 1999 RTO rule, petitioners contended that Order 2000 not only mandated informational filings as to expected RTO participation, but also had the effect of mandating such participation. In its decision, the court specified that if RTO membership were mandatory, utilities would "suffer the immediate and concrete injury of involuntarily having to cede their claimed statutory rights." But if membership was voluntary, it went on, utilities would "not be involuntarily ceding any claimed statutory rights, but rather voluntarily waiving them." "In view of our conclusion that Order 2000 does not mandate RTO participation," the judicial panel concluded, "the court lacks jurisdiction to address the utilities' challenges to the final rule." ***House Energy Subcommittee Examines Electricity Bill*** While FERC is moving ahead aggressively toward a competitive wholesale electricity market, legislation will help the panel reach this goal faster, Commission Chairman Pat Wood stated last week on Capitol Hill. "The uncertainty of the lengthy transition is harming infrastructure investment and reliability and raising Americans' electricity bills unnecessarily," the chairman said. "It is time to finish the job." Mr. Wood offered his views as he testified before the House Energy and Commerce Subcommittee on Energy and Air Quality during legislative hearings on Chairman Joe Barton's (R-TX) recently-introduced electricity bill (HR 3406). The chairman intends to proceed to markup next week. The subcommittee heard from a range of witnesses who have previously appeared before the panel on aspects of HR 3406. While many cited problems and reservations with particular aspects of the legislation, Rep. Barton strongly encouraged them to work with panel staff to address these issues, indicating strongly that he intended send a bill to full committee next week. ***FERC Commissioner Says Energy Legislation Critical*** Passage of comprehensive energy legislation is critical to US economic development, FERC Commissioner Nora Mead Brownell commented this week. Enactment of such a bill, she emphasized, "would be the greatest economic stimulus this country would see," creating certainty and stability in the energy arena and leading to the release of a pent-up energy market. While legislators are knowledgeable, Ms. Brownell observed at a National Energy Resources Organization (NERO) luncheon, "they are not as knowledgeable as the industry." Accordingly, she added, "it behooves us to work together on an energy bill." Turning to Commission matters, Ms. Brownell said that the regulators are committed to delivering the evolving energy industry out of "its ugly adolescence," specifying that the agency's purpose is "to ensure a robust, vibrant market with adequate infrastructure and technology. WHO'S WHO ***Southern Company Generation and Energy Marketing Announces Management Changes*** Southern Company Generation and Energy Marketing have announced a number of management changes in response to the expanding wholesale marketing and trading business. The company is a business unit of Southern Company. Paul Bowers, president of Southern Company Generation and Energy Marketing said the change will position the company to produce significant earnings through wholesale activities while also efficiently meeting the needs of the market. Doug Jones has been named senior vice president of energy marketing, and will continue to have the responsibility for managing the company's wholesale marketing and trading business. Ed Day was named vice president of business development, and he will direct the company's expanding wholesale marketing activities in the southeast. Robert Moore was named senior vice president and senior production officer for Southern Power Company, a Southern Company subsidiary that manages the unregulated generation fleet. ENERGY DATA *** Weekly Electric Output-Week Ending December 8*** Electric output reached 66,574 GWh for the week ending December 8 with all regions of the US experiencing a decrease in output compared to 2000. The Pacific Northwest region experienced the greatest decline, with a 14.9 percent decrease from 2000 output levels. Nationwide, there was a 10.9 percent decrease in output compared to the same week in 2000. Year-to-date, the Mid-Atlantic region experienced the greatest increase in output (4.0 percent) over 2000. For more information, email alliance@eei.org . The Alliance Express is a free news service sponsored by the Alliance of Energy Suppliers. This document can be redistributed. Please send questions, comments, or requests to alliance@eei.org , or telephone 202/508-5680. - C.DTF