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A 75th Anniversary Retrospective

Let's look back over the past few years-what we got right and where we went wrong.
Fortnightly Magazine - June 2004

for the generation segment, with a higher return on equity (ROE), to reward a higher rate of risk ().

This bit of heresy then attracted the attention of the premier rate-of-return witness of the time, Joseph Brennan, who teamed with Robert Malko in crafting a response. In short, Brennan and Malko argued that competition might actually reduce risk, as the telephone industry had seen falling ROEs both for competitive long-distance carriers, as well as for the still-regulated Baby Bells ().

Gaming the Power Price. That brings us to the question of gaming behavior in competitive power markets. And on that point, was out ahead. Years before the Enron debacle and the meltdown in California, we had run a piece by Ed Krapels and Vito Stagliano, with this prophetic quote: "Speculators will move in and out of electric futures for reasons that have little to do with supply and demand" ().

And yet perhaps our most notable scoop on gaming was something I had written, commenting on things I had heard at EEI's 1997 financial conference. At that time, I had quoted a certain Charles Oglesby, from an energy trading subsidiary of Houston Industries, on how energy traders might deal with an hour-ahead spot market: "We think we know a little bit about what will happen," he said [and I wrote], "if we hold our plant out for a few hours.

"We might decide to hold our plant off the market at 12 noon," he added,"even if the price looks favorable, because we know we can get a better price at 4 p.m."

In my column (), I added this tongue-in-cheek comment: "Imagine that. Did I just hear a utility say that it might try to 'game' the generation market?"

Some five years later, I was told that investigators examining the root causes of the California power crisis of summer 2001 had focused on my modest column as one of their most convincing pieces of evidence that traders had gamed the market.

They had read it in Public Utilities Fortnightly.

They Said It.

Fifteen favorites from Fortnightly.

"I've visited his house, I've swam in his pool. I've drank his wine."

"It hasn't been fun to be in transmission."

"I could put a [solar] system on somebody's roof and make them personally innocent of killing the planet."

"Stranded investment? It's a yawn."

"Bondholders' prayers have been answered-and the answer is no."

"Boy is that a bucket of worms."

"Try it at a cocktail party. It doesn't work."

"I feel like I'm at the second day of a two-day meeting and I missed the first day."

"We anticipate a four-year transition. … Heck, we have a five-year contract for telephone service with MCI."

"The rising tide has lifted all boats, even the leakiest."

"Just do something."

"Price caps cause higher prices."

"It's hard to imagine why the ISO would ever be controversial."

"No economists were killed or injured in the writing of this article."

"Tell customers they have a choice: freedom or security."

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