Utility executives face volatile energy markets, skyrocketing fuel prices, and changing federal energy policies. How are utilities benefiting from the turnaround in energy trading?
the United Kingdom, researchers have found that wholesale power prices have been as much as 75 percent above competitive levels at times.
"Because new plants must recover their capital costs as well as their operating costs to be attractive investments, there will be situations in which owners of existing plants who have market power can profitably raise prices above the competitive level without triggering entry," the report says. See www.doe.gov/HMP-0308.pdf.
Gas Storage Capacity. Regulatory changes coupled with steady growth in natural gas consumption are expected to trigger a 21 percent increase in gas storage capacity over the next 15 years, according to a new GRI study, "Natural Gas Storage Overview in a Changing Market Environment." The study estimates that storage capacity for working gas in the lower 48 states will grow from 3.8 trillion cubic feet in 1998 to 4.6 trillion cubic feet in 2015.
"These trends are already beginning to have a major impact on gas storage operations and will only be magnified in the future," said John Cochener, GRI project manager and principal analyst for resource evaluation.
"We are already seeing increases in the value of well-placed storage facilities, particularly those able to capitalize on regulatory changes that allow for greater operating flexibility."
Electric Customer Choice. The New York PSC announced on March 14 that an independent group, the Center for the Advancement of Energy Markets, places the Empire State behind only Pennsylvania in establishing customer choice in electricity.
In determining the rankings of the 50 states and the District of Columbia, the center examined 18 attributes, assigning numerical scores to each attribute to develop a composite score for each state.
Transmission & ISOs
ISO-Power Pool Combinations. On March 16 and March 22, respectively, the boards of directors of the Midwest Independent System Operator (MISO) and MAPPCOR (the corporate contractor for MAPP, the Mid-Continent Area Power Pool) OK'd four definitive agreements to combine the two organizations:
- Describes MAPPCOR assets, assumption of liabilities, and hiring employees by MISO.
- Covers the period between execution of the definitive agreements and closing.
- Assures MAPP members who do not join MISO that transmission services will be provided for at least six years from MISO's operational date.
- Assures MAPP members that such services will be provided under the MAPP restated agreement for at least six years from MISO's operational date.
Closing of the deal will occur when two-thirds of MAPP load joins the Midwest ISO.
RTO Oversight. By April 5, the Virginia commission was to have received legal briefs addressing its role in governing the formation of state-mandated regional transmission entities for electric utilities.
Specifically, the commission had asked for a legal analysis of whether federal law preempts state laws or rules aimed at restructuring the electric transmission sector.
Canadian Transmission. The Alberta Energy and Utilities Board OK'd revenue requirements, rate design, and tariffs for ESBI Alberta Ltd, the Alberta electric industry's independent transmission administrator (ITA) that administers the province-wide grid.
It approved a standard offer process providing financial incentives for new generators to locate in parts of the province where transmission constraints need