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Fortnightly Magazine - December 1998

Off Peak

Eric Hirst

Mitigation depends on the market. For regulators, that means a going-forward view.

If regulators allow recovery of some stranded costs, they should at least ensure that utilities operate their generating plants in a manner consistent with the actions taken by other owners of similar resources that participate in competitive markets for bulk power.

A priori estimates of stranded costs are almost certain to be wrong. Therefore, regulators should adjust recovery to reflect actual events (em in particular market prices for electricity.

Power Plant Acquisitons: Workforce Management from the Buyer's Perspective

Christopher S. Miller, Ph.D.

How to survive in a seller's market.

Divesting power plants today may look very much like a seller's market. Buyers may believe they lack the necessary leverage to take an aggressive position on workforce transition.

10 Innovators to Watch in 1999

Joseph F. Schuler, Jr.

These executives are energizing the power business with their persistence, ideas and pure gut instincts.

What is an innovator? Must he, or she, be an inventor? Or merely an idea-prone CEO with a knack for building a string of successful companies? Or could an innovator be both a scientist and CEO?

In this first-ever feature, Fortnightly has chosen innovators from all segments of the energy business.

Reforming California: Reflections on the Morning After

Jessie J. Knight Jr.

With few regrets, a regulator steps down from the PUC, still touting his brand of electric competition.

I'm proud to have been an author of the first chapter of a book still being written.

Today's electric industry is more competitive, more reliable, more efficient, and more dynamic than it was six years ago when I joined the California Public Utilities Commission. However, the future of the industry has not been set. The steps taken over the next several years will determine the outcome of electric competition.

Solar Mandate? Like it or Not, Consumers Pay

William A. Spratley

States earmark millions to fund solar projects via system benefits charges.

Making solar power a realistic choice for electric consumers is a burgeoning issue for state utility regulators. As part of electric restructuring, regulators are trying to finance the costs of solar installations.

Key to delivering commercial, on-grid solar power to new markets are state efforts, partnered with other government and industry actions. So far, the system benefits charge, or SBC, is the primary short-term incentive to develop solar, wind, biomass and other renewable resources.

Frontlines

Bruce W. Radford

Shaky merger policy finds the FERC at war with itself.

"IN HIS DELIGHTFUL ARTICLE, "THE FOLKLORE OF Deregulation," published this summer in the Yale Journal on Regulation, federal judge Richard Cudahy notes the ethereal nature of "virtual electricity." This new product, he explains,"exists only as a blip on a computer screen and will never give one a shock." "Reality," he notes, has "retreated to the money part of the system."

We could use a dose of that reality in looking at electric utility mergers.

People

DTE Energy Technologies named G. Paul Horst company president. Horst was founder and first chief executive officer of Nematron Corp. He pioneered the use of industrial computers to provide operator-to-machine interfaces similar to ATM machines. Since 1995, Horst has served as a director of Interface Systems and a consultant to DTE Energy.

Randy Hardy, former CEO and administrator of Bonneville Power Administration, has formed the Hardy Energy Consulting firm. Hardy will work with the Washington, D.C.

News Analysis

Phillip S. Cross

States continue to set ROE in price cap plans, stranded cost hearings, and some merger reviews.

In spite of a decline in the frequency of traditional utility rate cases, regulators at the state public utility commissions still have occasion to fix a target rate of return on common equity (em or ROE (em as a benchmark to determine what level of earnings is appropriate in a given setting.

Perspective

Alan H. Richardson

Public power is competitive power, and that keeps IOUs on their toes.

There they go again. You know who I mean, the critics who fear us in a competitive electric utility environment, or who oppose, for ideological reasons, government involvement in the power business.

Charles E. Bayless, in his article "Time's Up for Public Power" (Public Utilities Fortnightly, July 1, 1998), offered up just the latest of these below-the-belt blows.

It's tempting to respond in kind to these critics. Why? Because they torture the facts and distort the record.

Special Report

Courtney Barry

September meeting sends draft legislation back to the drawing board.

Reliability is a self-correcting issue (em if we let it slide, something will happen and it will be corrected ¼ [But] do you want the government to do it?"

That was one industry representative speaking of attempts by the North American Electric Reliability Council (known as NERC) to evolve into a self-regulating reliability organization, or SRRO.