AT Washington Water Power, Bobby Schmidt was appointed director of the company, and Paul A. Redmond announced his retirement as chair and CEO. Redmond started with the company in 1965. Previously...
10 Innovators to Watch in 1999
see that the PX didn't end competition in California with its proposed settlement before the Federal Energy Regulatory Commission to write off $100 million in development costs.
"It's an outrageous grab for monopoly power without regulation," Cazalet says. In the settlement, the California PX seeks flexibility to set the partial requirements price at any level, to develop new products subsidized by full requirements customers, and ultimately spend ratepayer money to compete with other power exchanges across the country.
APX is one of two holdouts in the case.
But Cazalet is used to sticking it out.
"We're a small organization," he says of his 38-employee company. "We have to find a way of doing it simply and cheaply. We don't have $100 million."
Cazalet started the company with his own money and in his own home in September 1996. Since then, several investors (em including Technology Partners, a Silicon Valley venture capital firm, and Bechtel Enterprises (em have pumped about $5 million into APX.
The underpinning of APX's design was sketched in Cazalet's Ph.D. dissertation on electric power system operation and planning. Then, over the last 10 years, while under contract to the Bonneville Power Administration, Cazalet developed an advanced power market simulation model and software product. It forecasts market prices by mimicking the hourly operation of every West Coast power plant and major transmission interface. The scheduling and dispatch methods were very similar to the current APX design.
In the APX system, participants make buy/sell decisions based on the APX Market Price(TM) posted on their computer screens. Orders can be placed close to delivery or a week in advance. APX's hours allow buyers and sellers to conduct business around the clock. A trader connects to the APX Market Engine using either the Internet or a modem and APX-supplied software. A screen shows the current market price and a calendar on which the trader can specify the days he wants to order power. The trader then indicates how much electricity he wants each hour.
About 50 participants have registered with APX, although not all are active.
Ironically, BPA isn't active because of credit concerns, which have loomed larger since the June 24 midwest power spikes, caused in part by a municipal utility with bad credit.
"We passed up a tremendous number of participants because of credit issues," Cazalet says. "Bonneville Power says they're going to come in eventually, but the stumbling block is the credit. It's not the quality of their credit, but the liquidity of it."
APX plans a rapid expansion over the next two years, which should make it a profitable company. Possible markets include the Midwest, the Northeast and the United Kingdom.
"[In New York,] they're going to build much more of a trading market that fits exactly in with the technology we've got," the CEO says. "They've essentially have abandoned what California has copied."
Cazalet and his company, indeed, have moved out of the kitchen ¼ and into the fire of free markets.
Anthony F. Earley Jr., president, chairman and CEO, DTE Energy Co. and Detroit Edison Co.