By unbundling usage from access, utilities can maximize contribution to margin and yet still retain load.
With deregulation and industry restructuring, energy utilities face price...
It was after seven o'clock in the evening (em nearly 12 hours since the DOE-NARUC Second National Electricity Forum had gotten underway up in Providence, RI (em when it all finally hit home. This time the regulators were serious. People were paying attention. Stay with me for a moment.
Two high-level staffers from the Federal Energy Regulatory Commission (FERC) were up at the podium, giving a class on the FERC's Electric Giga-NOPR (the Notice of Proposed Rulemaking on open-access electric transmission and stranded investment, released on March 29). I and about 700 other conference attendees had been at it since early morning, grabbing an earful of numbing acronyms like PURPA and PUHCA.
There we were (em 700 eager students and two FERC professors, well into our second hour of NOPR college (em when up to the microphone stepped Elizabeth Anne Moler, Chair of the FERC, intent on ringing the school bell. After all, the NOPR was over 300 pages long; the hour was late; we were tired; she probably was too. So first she thanked us for our rapt attention, and then she pleaded with us to put it to bed for gosh sakes and go out to the hall where the bar was open and the hors d'oeuvres lay waiting (em both untouched for an hour.
Nothing like a good rulemaking to keep a body out of trouble. Or, as commissioner James Hoecker said of FERC's NOPR, "Belly up to the buzzsaw."
The FERC won't admit it, but it has started down the road to breaking up the investor-owned electric industry.
The March 29 NOPR will require electric utilities that own transmission facilities to "sell" transmission to themselves as if they were a separate, third-party customer. Of course, the FERC has been very careful so far to say that its March 29 NOPR requires only functional unbundling (em not structural or corporate unbundling. But identifying and segregating electric utility "functions" within today's companies won't likely produce a competitive industry. I suppose you could split the auto business into functions (em design, testing, assembly, parts, service, and so on (em but when customers walk into the showroom, they want to buy a car.
In a regulated world, the number of "functions" never falls below the number of competing regulatory jurisdictions. Such "functions" often prove artificial; usually they only serve the process of allocating costs among political jurisdictions. True corporate unbundling (… la AT&T) would avoid this mess.
Up in Providence I was struck by some comments from Jeff Tranen, vice president at New England Electric System (NEES). Tranen has been working with John W. Rowe, president and CEO of NEES, on the NEES working proposal, announced last November (at the first DOE-NARUC national electricity forum), to sell off the company's transmission system to a third party (em perhaps a pool or a regional transmission group (RTG) (em that would own no generation. NEES would use the proceeds to write down stranded assets, including above-cost contracts with independent power producers (IPPs) or qualifying cogeneration and small power production facilities (QFs).