July 1, 2001
L.A. Loves a Loophole
There's no getting around it...
With this issue I've finished up my first 12 months as full-time editor of PUBLIC UTILITIES FORTNIGHTLY. During that time, I've tried to adhere to few simple rules. If I'm lucky, I'm batting four out of five:
s Trust ideas, not facts
s Welcome different views
s Don't shy from difficult subjects
s Make it easy to read
s Take a day off now and then.
Someone once said that an editor's job is twofold: "Simplify and exaggerate." That advice may sound peculiar, but one could do worse. Attention spans are short (em and justifiably so, given the demands on our time. Every article should say something, and what it does say should appear obvious immediately, in the first few lines. If in doubt, read it out loud. Of course, Mark Twain drew an exception for the music of Gustav Mahler, but my feeling is that the written word is never "better than it sounds."
Capacity As Commodity?
Capacity is fleeting, but money is firm. That idea ranks as one of the most interesting I've come across in my 12-month stint: That in a pure commodity market, one can employ financial instruments to overcome uncertainty in supply and demand. In other words, you can trade money easier than you can trade energy.
A futures market already exists for natural gas as a physical commodity. And the New York Mercantile Exchange has released some of the details of its proposed futures contract for electric power (contract unit of 736 megawatt-hours; delivery rate of 2 megawatts per hour; delivery period of 16 on-peak hours, from 6 a.m. to 10 p.m.). In fact, in June the Wall Street Journal began publishing its Dow Jones California/Oregon Border Electricity Price Index (DJ-COB). But can a commodity market develop in real time for natural gas or electric transmission capacity, which changes from moment to moment?
One person who is betting on that chance is Greg Lander, chairman and president of The National Registry of Capacity Rights, Inc. (NRCR), a not-for-profit corporation formed to take advantage of emerging commodity markets. I've talked with Lander several times during the past few months. He's got some interesting things to say.
Lander says he formed the Registry in January 1993, with the idea of gathering and storing information on transmission capacity rights for all major interstate gas pipelines. NRCR operates much like a registry of deeds. It isn't a trading system, says Lander, but more like an information infrastructure; it offers electronic data exchange (EDI) to support people who want to access data for their own trading. Lander's project attempts to play on the difficulty that some gas shippers have encountered in trying to reconcile inconsistencies electronic bulletin boards (EBBs) at various natural gas pipelines.
As explained by Fred Wolgel, senior staff advisor for customer services at Transcontinental Gas Pipeline Company, "There is a trend toward standardization and EDI. Greg Lander is basically an information gatherer and information marketer."
Tower of Babel
"We got lucky in gas," says Lander. "Everyone had built a bulletin board. We had the Tower of Babel. So