[BETA] Fortnightly

Industry leaders see a disaster coming, as the need for infrastructure investments collides with the economic interests of utility shareholders and customers. In a shaky economy and a politically charged campaign season, proposals for new capital expenditures are certain to cause trouble. Avoiding the train wreck will require real leadership in finding compromise solutions.

Should the power industry adapt its approach to capital markets in this environment? The answer, of course, is yes. Multiple frameworks are necessary to establish a power company’s or project’s current cost of capital, especially under volatile capital market conditions. The analyses reveal that in today’s capital markets, it is critical to balance or combine the alternative approaches to the cost of capital in order to develop a long-term view.

Utility CEOs debate the merits of a retail surcharge to fund clean-tech R&D.

I met Congressman Rick Boucher (D-Va.) in November. He was speaking to attendees at EEI’s Finance Conference in Phoenix, and after his speech many people remarked that they wished other members of Congress were even half as well versed about the utility industry’s issues as Boucher seems to be.

Economic uncertainties are raising doubts over utility returns. Will regulators feel the need to consider broader economic effects when engaging in ratemaking? While reporting on this year’s rate cases, the author provides insight on what to expect as stock prices fall.

True story: At the dinner table recently, my 11 year-old son—who’s running for 6th grade student council—bemoaned the arguments he’s having with other candidates. I asked what they’re arguing about, and he said “Everything.” “Oh really? What’s your position on the mortgage bailout.” “It sucks!” he blurted. I countered, “But if we don’t do it, the financial system will collapse.”

Several of the industry’s top-performing companies have been guided by CFOs with an expansive sense of what the finance office should offer to the business. Increasingly CFOs are developing the skills and capabilities to move beyond the traditional role of traffic cop to the more valued roles of business partner and enabler.

Thanks to the Internet, consumers expect 21st century companies to bring a sophisticated online presence. Utilities that leverage the interactive power of Web 2.0 will strengthen their positions in regulatory and competitive arenas.

Some advocates claim markets can help reduce electricity prices by changing the design of wholesale auctions. However, taking a pay-as-bid approach could make matters worse.

Fundamental questions about fuel supply, efficiency standards, and environmental performance have splintered Republicans and Democrats into warring factions. As a result, the only proposals legislators can agree upon seem to be watered down half-measures.