Is a proposed solution to energy-trading woes too little too late?
The Committee of Chief Risk Officers (CCRO) representing various utilities and merchant...
power costs that later prove to be bad bargains.
For example, the Montana Public Service Commission sounded an ominous warning in accepting procurement practices for power purchase contracts for PPL-Montana and Duke Energy, as part of its review of the default supply portfolio of Northwestern Energy:
"Northwestern is not guaranteed full recovery of the costs incurred under PPL-Montana and Duke Energy purchase power agreements-failure by Northwestern to prudently administer its supply contracts for the benefit of ratepayers could result in cost disallowances."
So utilities are left without any kind of safety net-except, perhaps, by the development of a truly competitive wholesale market and the development of more transmission infrastructure. Should the crystal-ball-gazers be wrong about reserve margins, capacity additions, and the affect of an improving economy on the industry, utilities may find out quite soon what a true crisis is.
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