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Fortnightly Magazine - April 2004

Commission Watch

Solving the dilemma.
John Seelke

Commission Watch

Solving the dilemma.

The rationale from the Federal Energy Regulatory Commission (FERC) for eliminating through-and-out (T&O) rates while simultaneously imposing a Seams Elimination Charge/Cost Adjustment/Assignment (SECA) is an acknowledgement that FERC is conflicted on a fundamental economic principle: regional transmission organization (RTO) loads use the transmission systems of exporting RTOs; therefore, it is correct for importing customers to compensate exporting RTOs for the use of their transmission syste

Business & Money

Some independent power producers failed to contain capital and O&M costs, adding to financial pressures.
Holt Bradshaw

Business & Money

Some independent power producers failed to contain capital and O&M costs, adding to financial pressures.

Merchant generators can substantially increase cash flow by revamping their capital allocation processes. Based on several recent client engagements, a PA Consulting study found that merchant generators often follow a flawed allocation process that misappropriates cash toward wasteful maintenance and capital expenditures, resulting in reduced asset values and erosion of precious cash reserves.

Technology Corridor

Smaller systems aren't cost-effective.
Gary C. Young, Ph.D., P.E.

Technology Corridor

Smaller systems aren't cost-effective.

It's time for a reality check on the commercial viability of wind farms. Are large wind systems more economical than small wind systems?

LNG Rising

Despite development challenges, LNG capacity is destined to play a bigger role in the U.S. energy mix.
Michael T. Burr

Despite development challenges, LNG capacity is destined to play a bigger role in the U.S. energy mix.

When MidAmerican Energy announced its plans to build a pipeline to bring stranded Alaskan natural gas into the lower-48 states, the U.S. energy industry stood up and took notice. If successful, the project will bring the largest infusion of gas that this country has seen in many years-and not a moment too soon.

The Case Against Gas Dependence

Greater reliance on gas-fired power implies serious economic, technological, and national security risks.
Roger H. Bezdek and Robert M. Wendling

Greater reliance on gas-fired power implies serious economic, technological, and national security risks.

Over the past two decades, the United States has, by default, come to rely on an "In Gas We Trust" energy policy. Natural gas increasingly has been seen as the preferred fuel for all applications, nowhere more than in the electric generation sector. However, the greatly increased use of natural gas forecast for the electricity sector may not be economically or technically feasible, and it does not represent optimal or desired energy policy.

The Generation Glut: When Will It End?

An analysis of the timing, location, and mix of new capacity additions that may be needed in the future.
Stephen T. Marron & John H. Wile

An analysis of the timing, location, and mix of new capacity additions that may be needed in the future.

It is universally accepted that there is excess generating capacity in most, if not all, regions in the country. Looking forward, several obvious, and interesting, questions arise: (1) When will new capacity be needed? (2) Where will it be needed? and (3) What types of plants will be needed? As any good economist would say, it all depends.

Banking on Predictability

A renewed capital investment structure is required for long-term investment in power infrastructure.
Frank A. Napolitano

A renewed capital investment structure is required for long-term investment in power infrastructure.

The bank markets and the long-term fixed income markets, or institutional investors, have long memories, and their pain is still fresh. Over the last few years, they have had to watch their investments in power infrastructure become distressed, bankrupted, or reorganized.

keys to Transmission and Distribution Reliability

A coordinated approach helps control costs.
Stephen W. Chapel   Jonathan A. Lesser

A coordinated approach helps control costs.

Historically, transmission and distribution assets have been quiet utility stepchildren- generally ignored by both regulators and senior utility management while, their generating asset relations remained in the limelight. But as restructuring of the electric industry evolved in the 1990s, a looming competitive environment created strong pressures within utilities to reduce spending.

Frontlines

Electricity rates may be heading skyward sooner than we think.
Richard Stavros

Frontlines

Electricity rates may be heading skyward sooner than we think.

Are state regulators in danger of bringing about the thing they most fear-higher electricity rates? Critics charge that some regulators seem to be opening up the cookie jar, letting utilities have as they please with no supervision.

People

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

People

New Positions:

Rep. Joe Barton, R-Texas, stepped into the role of chairman of the House Energy and Commerce Committee, succeeding Rep. Billy Tauzin, R-La., who is leaving Congress.

Duke Energy named David Hauser as its permanent CFO. He had been acting CFO since November. He succeeds Robert Brace, who resigned.

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