Christopher D. Seiple and Todd Myers
THE ENVIRONMENTAL PROTECTION AGENCY HAS PROPOSED wide-ranging regulations that will increase the cost of electricity production, particularly at the nation's lowest-cost, coal-fired generators.
Despite a doubling of electricity generation since 1970, atmospheric concentrations of sulfur dioxide and nitrogen oxide have declined. Title IV acid rain provisions of the Clean Air Act Amendments of 1990 will result in even greater reductions over the next few years. EPA has nevertheless charted a course to reduce utility emissions of these pollutants even further.
Roger D. Colton
UNIVERSAL SERVICE ATTRACTS MUCH ATTENTION these days, both in energy and telecommunications. But how do you measure success? Do regulators decide when goals are met by looking across an industry, or should management make the call company by company?
Consider the Telecommunications Act of 1996. It identifies the maintenance of affordable, or "universal," service for low-income consumers as an explicit statutory goal. In the electric industry, virtually every piece of restructuring legislation and every regulatory decision to date has included a universal service provision.
Jeremiah D. Lambert
IN A RECENT SPEECH TO A SOPHISTICATED WASHINGTON AUDIence of electric industry players, FERC Commissioner William Massey raised a difficult question: "Can ISOs become self-policing institutions, thereby allowing FERC to embrace light-handed regulation of transmission?"
In answering his own question, Massey confirmed a quasi-judicial role for independent system operators (em but only if they are "equipped with proper operational rules, including market monitoring plans that report market power abuses and contemplate enforcement mechanisms to assure compliance." %n1%n
Despite such op
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.
Michael C. W. Hsu and Nguyen T. Quan
THE RAPID DEREGULATION OF THE BULK POWER MARKET has exposed utilities and power generators to the harsh reality of spot price volatility. This new reality begs the question: How can merchant generators, independent power producers and investor-owned utilities analyze their risk exposure when energy prices vary daily or even hourly?
The answer lies with spark spread options (em the link between electric power and gas prices.
Michael T. Maloney
Robert Rosenberg in his comment on our paper makes a fundamental error regarding financial risk. (Rosenberg, "Unbundling Capital Costs: It Doesn't Add Up," Nov. 1, 1997, p. 46, responding to Maloney, McCormick, and Tyler, "The Wires Charge: Risk and Rates for the Regulated Distributor," Sept. 1, 1997, p. 26.)
Rosenberg claims that as utilities spin off into separate wires and generating businesses, risk will increase in both lines of business.
Steve Pickle, and Ryan Wiser
UNDER RETAIL COMPETITION, AT LEAST SOME electricity customers will make purchase decisions out of concern for the environment. A variety of utility green pricing programs already target environmentally concerned consumers. Recent experience in Massachusetts and New Hampshire confirms that utilities and power marketers are gearing up for full-fledged green power marketing to differentiate their products in a competitive environment.
Cliff Rochlin, and Roger Clayton
Divide the grid by usage (em local vs. regional. Apportion costs accordingly, to energy customers by fixed charge, and power producers by flow and distance.
Traditionally, utilities have received transmission costs through an average, rolled-in access fee, or postage-stamp approach. In a deregulated environment, that approach will lead to distorted pricing.
And not just because of transmission-line congestion.
Much of the current debate over electric transmission pricing has centered on the various competing methods of congestion pricing, such as zonal vs.
Joseph Kruger, and Melanie Dean
The overwhelming impression is one of growth (em in volume and in the number of participants.
The early 1990s was an anxious period for advocates of emissions trading. Concerns about whether the sulfur dioxide allowance market would ever develop tempered the heady success of the first national emissions trading program implemented by the Environmental Protection Agency under the Clean Air Act Amendments of 1990, Title IV. These concerns were heightened when in May 1992, Wisconsin Power & Light traded 10,000 allowances to the Tennessee Valley Authority.
Joseph F. Schuler, Jr.
U.S., rest of the world ponder CO2 emissions, with utilities caught in the middle.
Four months from now, in Kyoto, Japan, international policy negotiators will decide how quickly to curtail carbon dioxide emissions and allay the world's fears of melting ice caps and rising temperatures.
The amendments to the United Nations Framework Convention on Climate Change, or FCCC, are likely to be founded more on world and domestic politics than on science. Industry climatologists, after all, insist the atmosphere is not warming as fast as others predict, and could be, in fact, cooling.