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Fortnightly Magazine - March 2004

The Reliability Spending Conundrum

What is the right and prudent level of spending on service?
Daniel O'Neill

What is the right and prudent level of spending on service?

Times have changed for electric utilities. The combination of deregulation, mergers, major storms, and widespread outages has shifted the industry's emphasis to reliability. That wasn't always true. Even 20 years ago, the growth of load was adding so much to ratebases and driving such large rate increases that regulators spent a lot of time reviewing plans for capacity additions-and challenging utilities for over-spending.

NERC's Cloudy Crystal Ball

How much confidence do NERC demand forecasts warrant?
Tom Replogle

How much confidence do NERC demand forecasts warrant?

Independent consultants must properly estimate peak demand growth if they are to provide clients with reasonable market analysis. Some consultants defer to the North American Electric Reliability Council (NERC) on this matter because NERC bases its projections on utility-specific estimates developed with more information than consultants typically can access. NERC recently rolled out new demand growth forecasts, so the time seems right to explore whether this confidence is justified or misplaced.

Frontlines

Do-nothing regulators scare off investment, raising prospects for yet another large-scale power failure.
Richard Stavros

Frontlines

Do-nothing regulators scare off investment, raising prospects for yet another large-scale power failure.

Last summer's blackout is slowly fading from the radar screen. The silver lining that might have moved some to action has now tarnished.

People

New Opportunities:
We welcome submissions to People, especially those accompanied by a high-resolution color photograph. E-mail to: photos@pur.com

People

New Opportunities:

Allegheny Energy named Max Kuniansky director of investor relations. He previously held the position of vice president of investor relations for B/E Aerospace and investor relations specialist for FPG Group Inc.

Benchmarks

Strange bedfellows may provide a new supply option.
Brandon Owens

Benchmarks

Strange bedfellows may provide a new supply option.

Justifiable concerns associated with high natural gas prices have led analysts to consider the implications for new capacity development over the next decade. Expectations regarding the continued dominance of natural gas-fired units have begun to change. For example, in its , the U.S. Energy Information Administration (EIA) expects 112 GW of new coal-fired generating capacity to be constructed between 2003 and 2025-a 51 percent increase over EIA's 2003 forecast.

Perspective

Wisconsinites don't fear 'Day 2.' But let's get the grid rights right.
Robert M. Garvin

Perspective

Wisconsinites don't fear 'Day 2.' But let's get the grid rights right.

While working for the Wisconsin Public Service Commission (PSC), I have grown accustomed to the friendly advice frequently offered by regulatory colleagues and utility executives in higher-cost areas to the East.

Commission Watch

California anticipates changes in energy policy under its new governor.
Gordon P. Erspamer

Commission Watch

California anticipates changes in energy policy under its new governor.

The recall of California Gov. Gray Davis in November 2003 almost immediately led to speculation concerning possible changes in California's energy policy. Since his election, Gov. Arnold Schwarzenegger has assembled an Energy Working Group, co-chaired by Professor James L.

Business & Money

Can economies of scale make the industry more stable?
George W. Bilicic And Ian C. Connor

Business & Money

Can economies of scale make the industry more stable?

The recent Northeast Blackout framed for regulators and public policy-makers one of the central issues confronting the utility industry: infrastructure reliability and the significant capital investment requirements necessary for improvement. While estimates vary widely, some industry experts currently project that the investment necessary to revitalize and secure the transmission infrastructure in the United States may run in excess of $100 billion.

Technology Corridor

A digital grid to the home, secured via a local fiber-optic network, could position utilities to fix power and telecom together.
Steven R. Rivkin

Technology Corridor

A digital grid to the home, secured via a local fiber-optic network, could position utilities to fix power and telecom together.

Before billions are spent building new transmission lines to ensure reliable electric service, North American electric utilities should evaluate whether the alternatives-controlling demand and fostering distributed generation-might be more cost-effective and broadly beneficial.

Back to the Ratebase

BYLINE
Michael T. Burr

BYLINE

As a former independent power producer, George Lagassa is sympathetic to the woes of the merchant power industry. Until just a few years ago, he held the license to a micro-hydro qualifying facility (QF) in New Hampshire, so he understands what it takes to compete in a regulated-franchise industry. Yet, as the principal of Mainstream Appraisals in North Hampton, N.H., Lagassa is also a dedicated pragmatist. He sees the industry's consolidation trend as a sort of correction in the U.S. power market.

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