Resource planning is grinding to a halt. From EPA regulations to irrational markets, today’s policy missteps threaten tomorrow’s reliability.
Fortnightly’s Executive Roundtable considers industry options and risks.
Rapid changes in electric power markets are posing real-time challenges for operators of generating facilities across the country. Green energy mandates are driving expansion of variable generation. Shale gas reserves have pushed fuel and electricity prices to historic lows, just as new environmental rules are putting pressure on fossil-fired plants. Baseload facilities, designed to operate virtually 24/7, now are cycling to accommodate market fluctuations. And distributed generation, storage, and demand-side management are changing the way electricity is sold and distributed.
Last fall, with the support of exclusive sponsor Invensys, we launched a new online publication to focus on this range of issues, specifically as they pertain to the generation side of the business. In Fortnightly’s Power Profit we present the perspectives of leaders in the field about trends in asset optimization, resource planning, and risk management. Last October in Washington, D.C., we convened a roundtable meeting – comprised of senior operations executives at a range of power companies – to address these topics as a group. Additionally, Federal Energy Regulatory Commissioner Tony Clark dropped in to deliver the keynote address ( see sidebar “Jurisdiction Junction: FERC’s Tony Clark” ).
During the Fortnightly’s Power Profit executive roundtable, participants discussed the challenges of running long-term assets in a real-time world – and several agreed to let Fortnightly report some of their comments. They include:
• Paul G. Afonso, Partner, Brown Rudnick, and Executive Director, New England Energy Alliance;
• Jacob A. (Lon) Bouknight Jr., Executive Vice President and General Counsel, Public Service Enterprise Group;
• David A. Christian, Executive Vice President, Dominion Resources, and CEO, Dominion Generation Group;
• Hector Puente, Senior Vice President and COO, El Paso Electric;
• Thomas M. Rainwater, President and CEO, Essential Power; and
• Peter Martin, Vice President, Invensys Software and Industrial Automation, and Fellow, International Society of Automation.
Michael Burr, Fortnightly: The power industry is going through some fundamental transitions, but it’s still uncertain which changes will prevail and what will result. If you had a crystal ball that could show you what the U.S. power market will look like in 10 years, how do you think that view would differ from today’s market?
Tom Rainwater, Essential Power: I’m hearing a growing concern from some within our industry and particularly from new entrants that the traditional model enjoyed in this industry is in jeopardy of becoming technologically obsolete. There are parallels to other industries such as computing. In our country we’ve migrated from mainframes to micro computing. We abandoned the central-office landline telephone model for a distributed mobile telecom model, and in emerging economies they’ve completely leapfrogged the landline telephony model and gone straight to mobile smart phones and mobile computing. Our smartphones are more powerful today in many instances than mainframes were a few years ago. Is it possible that distributed generation ultimately could leapfrog the business model of central generation, transmission, and distribution? Is this unlikely or a fundamental risk that we as executives in this industry need to confront?
Hector Puente, El Paso Electric: Thirty years ago, some people were predicting that