A pseudonymous executive tells why the CCRO's recommendations don't pass muster.
The latest splash from the Committee of Chief Risk Officers1 (CCRO)-a new...
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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