Fortnightly Magazine - October 2005

Entergy on Edge

Can a single utility dispatch a regional grid system without a financial market?

Now comes Entergy’s pending plan to create an “Independent Coordinator of Transmission” to manage certain grid operations. On the surface, the plan would create independent accountability for the transmission grid, as called for in FERC Order No. 2000, with special attention paid to planning and expansion. Will the model work? Can it improve grid access for IPPs and reduce energy costs for Entergy’s ratepayers?

Byline: 

Bruce W. Radford

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Big-Time Mergers? Not So Fast, My Friend...

 

Whole-company deals may not take off with PUHCA repeal.

One simple line in the recent Energy Policy Act sets the stage for broader geographical ownership by current utilities and easier ownership from outside industries. Readers know very well that one line calls for the repeal of the depression-era Public Utility Holding Company Act, and many pundits have stated that a wave of mergers and acquisition activity is now imminent.

Byline: 

Edward Metz and Michael Tarney

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Risking a Green-Power Outage

Will eco-power survive the next five years?

"If you build it they will come" has not proven to be applicable for green-power programs. Utilities have to build their programs in the right way, with the right rewards and incentives—then the customers will come. If utilities do not do this, then the effort to expand renewable energy markets will suffer a great setback, one from which it will take many years to recover.

Byline: 

Mark D. Crowdis and Dr. David Bernell

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CFOs Speak Out: Looking Beyond Power

Chief financial officers discuss new strategies and the possibility of further convergence inside and outside the energy industry.

A whole new cast of characters is expected to enter the energy industry—overseas ventures, telecom firms, insurance companies, and financial-services groups. But even as the future seems to hold boundless opportunity, utility executives and industry experts continue to disagree on what sort of consolidation is right.

Byline: 

Richard Stavros

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Utility M&A: How Many Deals, and How Soon?

By opening the field to far-flung deals, PUHCA’s repeal changes the merger game.

The repeal of the 1935 Public Utility Holding Company Act has attracted a surprising amount of attention in the business and consumer press. But while some analysts predict a wave of utility M&A activity, others are more sanguine about the change.

Byline: 

Michael T. Burr

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CFOs Speak Out: Making Convergence Work

Warren L. Robinson, Executive VP and CFO, MDU Resources

Warren L. Robinson, Executive VP and CFO, MDU Resources: "In the 1920s we discovered some oil and gas. ... In the mid-1980s, we really broke it out and started to develop oil and gas fields outside our region."
Byline: 

Interview by Richard Stavros

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CFOs Speak Out: Utilities: Not Interested

Stephen I. Chazen, Senior Executive VP and CFO, Occidental Petroleum

Stephen I. Chazen, Senior Executive VP and CFO, Occidental Petroleum: "I think the skills of a utility management are different than the skills of an oil management… I don't think those are related industries. I don't think the skill of selling electricity to someone's house is really the same as the skill of an oil company."
Byline: 

Interview by Richard Stavros

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CFOs Speak Out: Growing Overseas

John R. Biggar, Executive VP and CFO, PPL Corp.

John R. Biggar, Executive VP and CFO, PPL Corp.: "We are satisfied with the level of investment in international properties, which are essentially all electricity distribution businesses."
Byline: 

Interview by Richard Stavros

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CFOs Speak Out: Enter the Mega Utility

Geoffrey S. Chatas, Executive VP and CFO, Progress Energy

Geoffrey S. Chatas, Executive VP and CFO, Progress Energy: "[We are] focusing on running efficient utilities in growing states that have favorable regulatory environments so that you have the opportunity to earn that kind of 12 to 13 percent return on equity on the utility business."
Byline: 

Interview by Richard Stavros

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CFOs Speak Out: Playing LNG for All It's Worth

Neal E. Schmale, Executive VP and CFO, Sempra Energy

Neal E. Schmale, Executive VP and CFO, Sempra Energy: "Make sure you manage the risk. ... We're very careful in that area. ... We're not building the LNG plants until we have the output contracted for."
Byline: 

Interview by Richard Stavros

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