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Frontlines

Fortnightly Magazine - April 1 1998

RISK. That's "Choice" of the four-letter variety. And it's a concept we're

beginning to overhear at industry confabs, whispered by utility execs and regulatory affairs reps.

Nowhere is this sort of compelling choice more apparent than in three topics we tackle in the pages of this issue. How much risk, for instance, is inherent in the answers to these questions: Will nuclear plants survive competition? How far should U.S. utilities go in investing in Latin America? How should transmission service be integrated with reliability rules? Authors Jay Maidment and Geoffrey Rothwell examine the first question and point out that all nuclear plants are not created equal. Most plants have the potential for improving operating costs.

Maidment and Rothwell crunched more than 2,000 reactor years of data. They discovered one of the best ways to improve performance is to cut operationing and maintenance costs; about 80 percent of these charges, other than fuel, are labor related. Does that mean more change is ahead? Will nuclear plant operators (em at least those running inefficient plants (em confront labor cuts while trying to balance safety and efficiency? Even further out, will those who see predicted capacity shortfalls invest in nuclear because of low fuel costs? Competition demands it; investors may have no choice.

Chile Over Chicago

Overseas ventures hold equal rank on the risk meter. Yet, despite the risk, as writer Charles W. Thurston makes clear, U.S. utilities are investing hundreds of millions of dollars in Latin America. In one hot spot, the Sistema Interconectado del Norte Grande region of northern Chile, three energy projects will compete for market share. Two might make it. But as one analyst says, U.S. utilities can win volume growth in Latin America. They can't gain volume in the United States or in Europe. Again, the market players have few alternatives.

Rounding out this issue's focus on change and risk is Bruce Radford's article on the Federal Energy Regulatory Commission's stab at integrating transmission service with reliability rules. FERC is trying to ensure transmission access as the industry builds a new reliability framework.

But FERC lacks clear authority over system reliability rules. Congress could break the impasse, but will it? Radford's report clearly precedes a showdown between FERC and the North American Electric Reliability Council. Not that they want to fight each other. The electric industry is putting them in a position where they will have no choice.

Joseph F. Schuler Jr.

Senior Associate Editor

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