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<title>Mississippi Staff Proposes Retail Competition Transition Plan</title>
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<p align="left"><strong><small><font face="Arial">About The Author:</font></small></strong></p>
<p align="left"><font face="Arial" style="font-size: 9pt">Robert A. Olson is a partner in the law firm of
Brown, Olson & Gould, P.C. which maintains a nationwide practice in energy law,
public utility law and related commercial transactions.</font></p>
<p><small><font face="Arial"><font style="font-size: 9pt">He can be reached at:</font><br>
<br>
<b><font color="#0000FF">Brown, Olson & Gould, PC</font></b><br>
2 Delta Drive<br>
Suite 301<br>
Concord, NH 03301<br>
<a href="mailto:[email protected]">[email protected]</a><br>
(603) 225-9716<br>
<a href="mailto:[email protected]"></a></font></small></p>
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<td width="75%" valign="top"><img src="../images/statelin.gif" alt="STATELINE by Robert Olson" border="0" WIDTH="375" HEIGHT="75"><p><b><u>
<br>
<br>
December 1997</u><br>
</b><big><big><big><strong><font face="Arial">Mississippi Staff Proposes
Retail Competition Plan<br>
</font></strong></big></big></big><strong>by Robert Olson -- Brown, Olson and Wilson, P.C.<br>
</strong><font face="Arial" size="2">(<em>originally published by PMA OnLine Magazine:
05/98</em>)<br>
<br>
</font><font face="Arial">The Mississippi Public Utilities Staff recently issued a
"Proposed Transition Plan for Retail Competition in the Electric Industry", at
the request of the state Public Service Commission. The Plan would introduce retail
competition into the Mississippi electric power market beginning on January 1, 2001. The
Plan focuses primarily on the principal investor-owned electric utilities operating in the
state, Entergy Mississippi, and Mississippi Power Company, a Southern Company subsidiary.
The state’s many municipal utilities and electric power associations would be
permitted to choose whether or not to participate in retail competition, in recognition of
limitations imposed by the Rural Utilities Service, long-term power contracts, IRS
tax-exempt financing rules and the relationship of many such public power suppliers to the
federal Tennessee Valley Authority. </font></p>
<p ALIGN="JUSTIFY"><font face="Arial">The proposed staff schedule for the transition
period calls for the investor-owned utilities to unbundle rates by January 2000. As of
January 1, 2000, certified "energy service providers" could initiate the process
of bilateral contracting. A bilateral contracts model is recommended by the staff as
opposed to the creation of a statewide or regional independent system operator. Each of
the investor-owned utilities would be required to divide into at least three functionally
separate entities, including an energy services provider affiliate, a transmission and
distribution affiliate and a system operator affiliate. Each company’s affiliate
system operator would manage its electric transmission system in a non-discriminatory and
equitable manner. The various affiliates would operate under strict codes of conduct
designed to prevent affiliate abuse in the sharing of information, cross-promotion,
corporate identification and anti-tying. The distribution rates of the wires affiliates
would continue to be regulated by the Public Service Commission according to the
state’s performance-based rate regulation standards. </font></p>
<p ALIGN="JUSTIFY"><font face="Arial">The staff is most concerned with the retail market
power of Entergy and Mississippi Power, which it deems to be a "rebuttable
presumption". The companies would be required to establish the absence of excessive
market power within their respective service territories or to propose appropriate
mitigation measures. If excessive retail market power cannot be mitigated by a company,
then it would not be permitted to provide default standard offer service to retail
customers within its territory and such service would be subject to a competitive bidding
process. </font></p>
<p ALIGN="JUSTIFY"><font face="Arial">Under the staff Plan, alternative energy service
providers would be certified by the Commission, upon an adequate showing of reliability
and creditworthiness, for which specific criteria are set forth in the Plan. In addition,
the proposed Plan would require energy service providers to "commit reliable capacity
to a minimum share of the small customer market before being allowed access to the large
customer market." Energy service providers would also be required to comply with
numerous consumer protection provisions.</font></p>
<p ALIGN="JUSTIFY"><font face="Arial">Stranded cost recovery by utilities would be
permitted by the Commission on a case-by-case basis upon petition by a utility. Recovery
of "any net, verifiable, prudent, non-mitigable losses" would be effected
through the collection of a "competitively neutral", non-bypassable wires charge
during the transition period (expected to run from January 1, 2001 through December 31,
2004). Utilities would not be required to divest their generation assets through third
party sales, but would be required to undertake all practicable steps to mitigate losses,
including the exercise of any termination or release clauses in existing power contracts,
the renegotiation or buyout of power contracts that do not have termination or release
clauses or the auction of power purchase contract rights. The staff Plan maintains that
"exit fees and securitization are recovery mechanisms that should not be adopted
because of their anti-competitive characteristics."</font></p>
<p ALIGN="JUSTIFY"><font face="Arial">The staff has set forth a detailed implementation
schedule for its transition plan, with hearings and rulemaking proceedings to begin in
late 1997 and run through 1999. The staff also indicates its belief that legislation is
required to authorize the Public Service Commission to implement retail competition, and
that such legislation must be enacted in 1999 in order for the schedule set out in the
Plan to be followed.</font></p>
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<p align="left"><font face="Arial">
<small>Robert A. Olson is a partner in the law firm of Brown, Olson &
Gould P.C.
which maintains a nationwide practice in energy law, public utility law and related
commercial transactions. He can be reached at:</small></font><p align="center">
<font face="Arial"><small><font color="#0000FF"><b>Brown, Olson & Gould, PC</b></font><br>
2 Delta Drive, Suite 301<br>
Concord, NH 03301 <br>
<br>
<a href="mailto:[email protected]">[email protected]</a> | (603) 225-9716<a href="mailto:[email protected]"></a></small></font>
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