(August 2011) Shaw Group completes 500 MW combined cycle plant; Pattern Energy begins building Spring Valley wind farm; AEP, Duke and TVA team up on interstate...
industry. And third, customers and fans are all important. Without them, there's no real game to play (em and many of them think that utilities make too much money!
The restructuring of the electric and gas industries brings many factors in play, but these three (em reliability, competition, and customers (em are the critical ones that need to be weighed and balanced.
Reliable electric and gas service has been a bedrock for the economic growth and development that has occurred and will continue to flourish in our towns, cities, and regions. Baseball has been a constant in the American phenomenon for over a century. How did millions of Americans feel when baseball was on strike? How do customers feel when they don't have power or the gas stove won't light? Numerous gas companies, industry regulators, customers, and suppliers continue to struggle with the questions of appropriate level of reliability and the nature of the obligation to serve that can be afforded today. As electric restructuring evolves, utilities, regulators, customers, and alternative suppliers are asking similar questions.
After the baseball strike, Cal Ripken was, to many, everything that was right about game. The reliability that the utility industry strives for (em and achieves (em is what's right about our industry. Without reliability, there would have been no streak for Cal Ripken. Someday Cal will hang up his spikes forever. The utility industry also has a "streak" going (em far longer than 2,130 days (em that cannot and should not end.
There is an intense level of competition in the utility industry. On the gas side (em with the deregulation of the wellhead market, Order 636 restructuring firmly in place, and the maturation of the local unbundling process (em aggressive marketing and sales forces are seeking to capture end-use markets. On the electric side, the pace of change is intensifying due to a variety of legislative, regulatory, and market factors. The structure of the industry is evolving; new business combinations are a natural response to the changed and charged environment.
For example, a spate of mergers and acquisitions is creating larger gas and electric companies. As of this writing, the latest announcement is the planned merger and strategic business combination of Baltimore Gas and Electric Co. and Potomac Electric Power Co. Joint ventures and other new business arrangements are springing up between gas and electric companies and various industry players. Further, a focus on the energy business, broadly speaking, will spur competition among any fuels that are a source of energy. New market entrants, such as power marketers, are attempting to fuel the competitive fires. But through it all, reliability of service must be maintained as companies rethink what it takes to be successful, and regulators struggle to maintain the appropriate balance between ratepayer and shareholder interests.
Playing the Game
All utilities hope that their customers will become their best fans. Unfortunately, many think we make too much money. Many customers want lower rates at the same or an increased level of reliable service, especially larger customers. Certain customers, or new market entrants hoping