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---------------------- Forwarded by Vince J Kaminski/HOU/ECT on 04/27/2001=
=20 10:46 AM --------------------------- "The Alliance of Energy Suppliers" <alliance@eei.org<@listserver.eei.org on= =20 04/25/2001 10:34:40 AM Please respond to ntarr@eei.org Sent by: bounce-app-ippexecs-33275@listserver.eei.org To: "Generation and Power Marketing Executives"=20 <app-ippexecs@listserver.eei.org< cc: =20 Subject: Alliance Info Alert Dear Generation/Power Marketing Executive: The following is this week's Alliance Express newsletter, and a special=20 announcement regarding a proposed action by the Financial Accounting=20 Standards Board (FASB). FASB 133 FASB is considering an exception to Statement of Financial Accounting=20 Standards (SFAS) No. 133 that will exempt energy companies from the=20 requirement to account for capacity contracts as derivatives. A vote again= st=20 the exception would result in a significant increase in earnings volatility= ,=20 and raises other important concerns for energy suppliers. (Attached is a= =20 summary of this issue.) The Board is expected to vote on this issue during= =20 May 2001. EEI will be taking steps to appraise FASB of our concerns. If= =20 you, or company CFO would like more information about this effort, please= =20 contact Richard McMahon, Executive Director of the Alliance of Energy=20 Suppliers, at rmcmahon@eei.org, or at 202-508-5571. Alliance of Energy Suppliers Express=02=05Apri= l 25,=20 2001 INSIDE WASHINGTON FEDERAL AFFAIRS ***Bill Repealing PUHCA Is Approved By Senate Committee*** The Senate Banking Committee today approved S 206, a bill that repeals the= =20 Public Utility Holding Company Act of 1935. The bill would repeal PUHCA an= d=20 transfer oversight of public utility holding companies from the Securities= =20 and Exchange Commission to the Federal Energy Regulatory Commission and=20 appropriate state agencies. S.206 was approved with two amendments. Offered by Sen. Mike Enzi (R-WY),= =20 the first amendment would establish the Electric Energy Market Competition= =20 Task Force to study competition in the wholesale and retail market for=20 electric energy in the United States. The task force would be made up of=20 representatives of FERC, the Department of Justice and the Federal Trade=20 Commission, as well as non-voting representatives from the Department of=20 Agriculture and the Securities and Exchange Commission. The amendment also= =20 contained a provision, co-sponsored by Sen. Paul Sarbanes (D-MD), that woul= d=20 preserve FERC's authority to require that energy rates are reasonable and d= o=20 not include the pass-through of holding company costs that are unrelated to= =20 energy. Another amendment, offered by Sen. Jon Corzine (D-NJ), initiated a study by= =20 the General Accounting Office of the success of federal and state governmen= ts=20 in preventing anticompetitive practices by public utility holding companies= =20 and in promoting competition and efficient energy markets. ***Institute=02=07s Tax Agreement With Public Power Again Introduced on Hi= ll*** The tax agreement EEI reached with the American Public Power Association=20 (APPA) and the Large Public Power Council (LPPC) again has been introduced = in=20 the House. The bill (HR 1459) contains the same provisions as were in a=20 measure (HR 4971), with technical corrections, introduced during the 106th= =20 Congress. HR 1459 was introduced by Rep. J.D. Hayworth (R-AZ) and nine=20 original co-sponsors from the Ways and Means Committee. HR 1459 contains four key provisions with tax code changes: 1) The tax-fre= e=20 sale or spin-off of transmission assets into an RTO is allowed, 2) Nuclear= =20 decommissioning laws are adapted to a competitive market by allowing=20 deductions to a trust fund no longer subject to cost-of service ratemaking,= =20 3) The contributions in aid of construction (CIAC) tax on interconnections = to=20 transmission and distribution facilities is eliminated, and 4) Private use= =20 tax rules are changed to permit open access to transmission and distributio= n=20 facilities. The measure was referred to the House Ways and Means Committee, and EEI has= =20 urged Congress to act without delay in moving it forward. Enactment will= =20 help encourage a vigorous but fair competitive environment, the Institute= =20 noted. The same legislation has been incorporated into S 389, Senate Energ= y=20 Committee Chairman Frank Murkowski's (R-AK) energy security bill, and=20 stand-alone legislation could also be introduced. Hearings are expected to= =20 be held in both the Senate Finance and House Ways and Means Committees,=20 probably after consideration of President Bush's individual tax proposal. ADMINISTRATION/FERC ***White House Seeks $2 Trillion Budget In Fiscal Year 2002*** President Bush last week transmitted a $2 trillion fiscal year 2002 budget= =20 request to Capitol Hill. The Administration noted that its proposal=20 *moderates recent explosive growth in discretionary spending to four percen= t=20 in 2002,* an increase of $26 billion over the preceding fiscal year. The= =20 budget bid contains a $231 billion total surplus in 2002, and projects a $5= .6=20 trillion surplus over the next ten years. In the energy area, the Administration noted the federal government=02=07s= =20 *longstanding and evolving role* in the sector, pointing out that most=20 federal energy programs and agencies have no state or private counterparts.= =20 It proposed about $2.8 billion in discretionary spending for energy program= s,=20 and about $2.1 billion in tax benefits, *mainly to encourage development of= =20 traditional and alternative energy sources.* DOE=02=07s budget request was= $19.2=20 billion, including $2.3 billion for energy resources programs. This later= =20 figure represents a decrease of $196 million, or 7.9 percent, from fiscal= =20 year 2001. In the environmental sector, the Administration sought some $7.3 billion in= =20 discretionary funding for EPA, including a $3.7 billion operating program= =20 focused on implementation of most federal pollution control laws. ***Success of Restructuring Tied to Energy Strategy, FERC=02=07s Massey As= serts*** Electric restructuring may be in jeopardy, and its success *is in the hands= =20 of regulators and policymakers,* FERC Commissioner William Massey has=20 asserted. Speaking at a recent National Governors Association policy forum= =20 in Philadelphia, Commissioner Massey urged officials to pay attention to th= e=20 key elements of a national energy strategy. First, he specified, there is a need for an adequate supply of the energy= =20 commodity. Turning to a second element, Commissioner Massey told forum=20 attendees that *all the supply in the world won=02=07t help unless it can b= e=20 delivered over an adequate, efficient, non-discriminatory network.* =20 Commissioner Massey identified market structure as the third essential=20 element of a national energy strategy, while citing an inherent difficulty:= =20 that *good structure cannot be easily parsed between wholesale and retail= =20 jurisdictions.* Accordingly, he said, FERC and the states must work togeth= er=20 on market structure. The final element of a successful energy strategy, the commissioner=20 specified, is the need for aggressive FERC intervention when markets fail t= o=20 do their job. *If the states cannot depend on the wholesale market regulat= or=20 to ensure reasonable prices for consumers,* he cautioned, they *will surely= =20 think twice before heading down the restructuring path.* NEW GENERATION ***Dynegy To Build Second Plant in Kentucky*** Dynegy has announced plans to construct a new 330 megawatt plant adjacent t= o=20 the Riverside Generating project in Lawrence County, Kentucky. Dynegy will= =20 sell the power generated at the plant in the wholesale market. Commercial= =20 operation is expected to begin first quarter of 2002. ***PPL To Expand Generation Capacity*** PPL Corporation this week said it would build a 540 megawatt power plant ne= ar=20 Chicago and would increase the capacity of its Susquehanna nuclear plant by= =20 100 megawatts. CEO William Hecht said the Illinois plant is expected to be= =20 in service by the summer of 2002. ***Constellation Energy Group Announces Eight New Plants*** Constellation Energy Group this week announced that the company is schedul= ed=20 to bring four peaking power plants on line this summer. Additionally, four= =20 larger power plants are scheduled to enter service in the following two=20 summers. The four peaking plants are located in Illinois, Pennsylvania,= =20 Virginia and West Virginia. The larger power plants are under construction= =20 in California, Florida, Illinois, and Texas. *We=02=07re building in these seven states because they serve regions where= =20 wholesale electricity is needed and where we can provide energy to support= =20 our national power marketing business,* said Constellation Energy Group=20 Chairman and CEO Christian Poindexter. ***California Energy Commission Approves Construction of Otay Mesa Generati= ng=20 Plant*** PG&E Corporation=02=07s National Energy Group (NEG) last week announced tha= t the=20 California Energy Commission (CEC) has approved construction of the Otay Me= sa=20 Generating Plant in San Diego County, which the NEG has developed. The 500= =20 megawatt project will produce enough electricity to power about 1,000 homes= . =20 After the development process is completed, Calpine Corporation will assume= =20 ownership of the project and will construct and operate the plant. NEG wil= l=20 contract for up to half the plants output. ENERGY DATA *** Weekly Electric Output (Week 15)*** Electric output reached 63,528 GWh for the week ending April 14 (Week 15),= =20 with the highest increase over 2000 levels in the South Central states, whi= ch=20 both had a 12.6 percent increase over 2000 for week 15. Year-to-date, the= =20 Rocky Mountain region experienced the greatest increase in output (7.6=20 percent) over 2000. For more information, email alliance@eei.org. The Alliance Express is a free news service sponsored by the Alliance of=20 Energy Suppliers. This document can be redistributed. Please send=20 questions, comments, or requests to alliance@eei.org, or telephone=20 202/508-5680. Nancy Tarr Manager, Business Development EEI Alliance of Energy Suppliers 701 Pennsylvania Ave., N.W. Washington, D.C. 20004 Telephone: 202-508-5680 FAX: 202-508-5600 www.eei.org/alliance ntarr@eei.org - TEXT.htm - FASB-The Impact on Energy Companies of Treatment of Capacity C
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