Some time ago, you signed up to receive my Grassroots Newsletter.  Since that time, you’ve heard very little from me; in fact, you’ve heard virtually nothing.  Well, I have finally committed to start getting out the newsletter, and here is Volume 1, Number 1.  You can also read the newsletter on our web site, www.tipmont.org under General Info.

 I intend to review federal and state energy legislation that would impact Tipmont and our industry. 

 Federal

 Energy Policy

President Bush unveiled his Energy Policy.  It seems to emphasize increasing energy supplies; while there is considerably less emphasis on alternative energy.  We support the emphasis on increasing supply; however, we would like to see additional support for alternative forms of energy.

 Deregulation

With the recent events in California, there is little activity in developing and/or proposing federal legislation mandating customer choice across the US.  This issue will probably resurface if there are no additional blackouts in California and if power supply prices in California continue at their current relatively low levels.

 State – Recent 2001 Legislative Session

 Even though, over the past year, energy issues took center stage nationally, even though there was a great deal of discussion about energy issues at the state, and even though there were a sizable number of bills submitted during this Indiana legislative session, there was very little energy legislation actually enacted.  In fact, by one count, there were at least 35 utility bills proposed.

 Merchant Power Plants

There a great deal of legislation proposed that would have required a much more Indiana Regulatory Utility Commission oversight of merchant power plants.  Merchant plants are power plants that are constructed by companies that do not have retail customers in Indiana or by unregulated subsidiaries of utility companies that do have retail customers in Indiana.  They are being built as business opportunities.  The vast majority of power plants proposed for Indiana over the next few years are being planned as merchant plants.  Despite the many proposed pieces of legislation, none were enacted.  However, House Resolution 98 was passed, which asks the IURC to establish a committee to recommend minimum standardized skill and training standards for employee who operate or maintain electric utilities.  Obviously, this is something Tipmont will be observing with great interest.

 IURC Fines

Because of concerns about quality of service by certain telephone and electric utilities, a spate of legislation that would have granted the IURC authority to impose rather stiff fines was proposed, but none was enacted.

 Annexation

Tipmont and other REMCs and municipal utilities mutually supported legislation that would have attempted to resolve municipal annexations of REMC territory.  It would have permitted municipal electric utilities to serve REMC territory annexed by municipalities without the threat of litigation, but would have provided REMCs with enhanced compensation for the loss of the territory.  This legislation was not enacted.

 Deregulation

Because of events in California, this issue never really got off the ground.

State – Upcoming 2002 Legislative Session

Merchant Power Plants

You can expect the state legislature to revisit this issue once again.  Tipmont supports IURC oversight of power plants, similar to the oversight they would have of utility-constructed plants.  However, there are those folks that would prefer to ban the construction of power plants.  Tipmont strongly disagrees with this position.  It is very likely that most future power plants will be merchant plants.  The power plant business has totally changed over the past few years.  New generation throughout much of the US is being supplied by merchant plants.  To prohibit merchant plants would effectively be a decision to discontinue building power plants in Indiana.

IURC Fines

You can also expect this issue to resurface.  Tipmont does not object to IURC fining capability, although we really “don’t have a dog in the fight.”  Tipmont is no longer under the jurisdiction of the IURC, except with regard to service territory issues.

Other Business Opportunities

There will likely be a move by some folks to restrict REMCs from getting into businesses other than electricity.  This push is coming primarily from the propane industry.  Tipmont has no objections to establishing certain “ground rules” that would prohibit subsidizing of our entry into and operation of other businesses by Tipmont by our core electric wires business.  While we have no objection to these sorts of restrictions, we would like to be able to continue offering other services, like long-distance telephone, internet, and yes, propane, to our members.  One special note about propane.  With the advent of fuel cells that are often powered by propane, it is possible we will see a convergence of the electricity and natural gas/propane businesses.  In the future, it is very possible that if we are not in the natural gas/propane business, we will not be able to be in the electricity supply business.  Obviously we would object to that result.