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Fortnightly Magazine - April 1 1998

Frontlines

Joseph F. Schuler, Jr.

RISK. That's "Choice" of the four-letter variety. And it's a concept we're

beginning to overhear at industry confabs, whispered by utility execs and regulatory affairs reps.

Nowhere is this sort of compelling choice more apparent than in three topics we tackle in the pages of this issue. How much risk, for instance, is inherent in the answers to these questions: Will nuclear plants survive competition? How far should U.S. utilities go in investing in Latin America? How should transmission service be integrated with reliability rules?

People

ENTERGY Power Group named Charles J. Brown III group president of development. Previously, Brown was responsible for Entergy's European project development.

Shahid J. Malik was promoted from senior vice president and COO to president and CEO of Entergy Power Marketing Corp. Malik joined the company in February 1997.

Ameren Energy, Ameren Corp.'s new independent energy marketing and trading affiliate, named Shannon B. Burchett president. Burchett previously served as senior vice president of marketing with Duke/Louis Dreyfus.

Harold W.

Mail

Andrew M. Vesey

ENTERGY REPLIES. In the Feb. 1, 1998 article "Reliability or Profit: Why Entergy Quit the Southwest Power Pool" (p. 30), authors David Dismukes and Fred Denny allege that they have uncovered a "subplot" in Entergy's transfer from the Southwest Power Pool to Southeastern Electric Reliability Council. The fact of the matter is Entergy's rationale for the transfer was clean and above-board. It simply made more sense for Entergy to join SERC for loop flow, reliability and security reasons.

News Digest

Lori A. Burkhart, Phillip S. Cross, and Beth Lewis

Federal Agencies

ELECTRIC RETAIL PRICES. The Energy Information Administration has released a new report finding that the average retail price of electricity has declined for the third year in a row and remained stable for the first nine months of 1997. According to Electric Sales and Revenue 1996, average residential electric prices declined slightly in 1996, the first drop for that consumer class since the EIA began collecting data in 1984.

News Analysis

Bruce W. Radford

In an ideal world, legislation would have already happened."

That was Elizabeth Moler, deputy secretary of energy, testifying as the first witness at a Feb. 20 public conference at the Federal Energy Regulatory Commission. The forum attempted to address how to ensure access to transmission as the electric industry builds a new framework to maintain system reliability.

Having just stepped down from the top spot at the FERC, Moler knew what to expect. She understood the limits of the FERC's statutory authority and its budget.

Perspective

Raymon E. Lark Jr.

Cynicism is nothing to scoff at. Cartoonist Scott Adams of Dilbert( fame has made a good living at it. But cynicism has an Achilles' heel. It reflects a certain lack of objectivity. It may deflect serious debate.

Consider the securitization of electric utility stranded costs. Last summer, after Ken Rose had thrown down the gauntlet against securitization, %n1%n I heard him speak at the 1997 NASUCA mid-year meeting and was struck that his message might make mischief in state regulatory and legislative arenas.

Off Peak

While U.S. natural gas prices increased about 7 percent from 1996 to 1997, the country ranked only 10th highest in a survey of gas prices in 13 industrialized nations. But first-quarter 1998 may tell a different story (see "Gas Price Volatility," Public Utilities Fortnightly, March 15, 1998, p. 38).

Gas Prices in Sweden jumped 30 percent over the last two years to 105.69 cents/therm in 1997, rocketing past an inflation rate of 20 percent. The major reasons for the price surge?

All Nuclear Power Plants Are Not Created Equal

Jay Maidment and Geoffrey Rothwell

April 01, 1998

WHICH NUCLEAR PLANTS WILL SURVIVE competition? To answer that question, senior managers at electric utilities must know a nuclear plant's true economic potential. Without an accurate understanding of operating economics, a utility might lose a good plant or waste resources on poorer plants that should be closed.

Of course, a shutdown may be appropriate at some plants (em perhaps a few situated in the most competitive regions, or others plagued by poor inherent physical characteristics. However, most U.S.

Showdown in Latin America

Charles W. Thurston

PURRED BY FLAT POWER DEMAND AT HOME IN RESIDENTIAL and industrial markets, U.S. utilities are taking huge risks in Latin America. Why? They are enticed by the promise of high-yield returns on generation, distribution and transmission deals.

Yet only some of the companies getting in on the ground floor of privatization or winning concessions in the Latin American energy market stand to make huge profits. Others, too slow to beat competitors, or not savvy enough to skirt political and regulatory land mines, could lose their shirts.

Unbundling Electric Discos: Overseas and at Home

Ahmad Faruqui and Laurence D. Kirsch

As the U.S. electric power industry unbundles, the industry and its regulators grapple with two big questions concerning the degree to which distribution services should be unbundled. First, what groups of distribution activities can separate suppliers provide? Second, which of these groups of activities should be open to competition?

Looking at the unbundling experiences of Argentina, Australia, Canada, Chile, Norway and the United Kingdom sheds light on these questions. The distribution unbundling of the U.S. gas and telecommunications industries provides additional insights.

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