A new law dampens coal-by-wire prospects.
Gary L. Hunt and Richard Lauckhart
A 2007 law essentially prohibits California utilities from signing long-term contracts for power, including those from out of state, unless they emit less than 1,000 pounds of CO2/MWh of electricity produced. While the law does not specifically bar coal-fired generation, the limit is set low enough to rule out all coal-power plants. A modern, highly efficient natural gas-fired plant barely would qualify. These measures, plus the new carbon-cap law going into effect by 2012, have sent utilities—large and small, private as well as municipal or city-owned—into a frenzy as they scramble to find alternatives to coal to meet their future demand.
Rothschild investment banker Roger Wood explains why those new infrastructure funds are hot on utilities.
He was quite literally the toast of last year’s EEI Finance conference. Using his bank’s diverse resources (Rothschild vineyards in France), he arranged an unforgettable wine tasting that was a big hit with utility executives. Roger Wood, the head of Rothschild’s Power & Utilities Group in North America, is one of the few true white knights on Wall Street. Whereas many banks have developed businesses that can conflict with their utility clients’ interests, Wood says Rothschild’s bankers “live and die by providing long-term independent advice.”
Can the upward swing in global power infrastructure investment be sustained?
The current recovery in global power-sector investment is being driven not only by rising demand for power, but also by the huge levels of liquidity in global financial markets. How long will the current up-cycle last?
(January 2007) PNGC Power promoted Tom Haymaker to vice president of power supply. Calpine Corp. announced that Larry B. Leverett joined the company as senior vice president, gas trading. ITC Holdings Corp. announced that William J. Museler has been appointed to its board of directors. Sierra Pacific Resources announced that William D. Rogers has been named to the new position of vice president, finance and risk, and Corporate Treasurer. And others...
Utilities place billion-dollar bets on infrastructure, but the deck may be stacked against them.
Richard Stavros, Executive Editor
Something seems deeply disturbing about the utility industry these days. An almost palpable tension rises whenever the utility CEO is asked how he will build enough power plants to meet the skyrocketing demand for power. Some consultants predict that sometime after this decade the time will come when utilities won’t be able to build enough to meet demand, no matter what they try.
How Congress opened another can of worms with its call for regional joint boards to study power-plant dispatch.
Did Congress really invite the industry to re-examine the concept of economic dispatch, as practiced by the regional grid operators and RTOs, through market bids, day-ahead markets, a centralized auction, and a uniform market-clearing price? Perhaps not, but skeptics of RTO practice have called the bluff, if that’s what it was.
Utilities must trim the fat from excessive stock options, stock grants and executive pay.
Richard Stavros, Executive Editor
This month’s cover story focuses on how utilities intend to find the talent they’ll need over the next few years to replace all those retiring baby boomers. And part of that puzzle naturally involves executive pay: how to attract the best and brightest without going overboard on rewards for performance.
To the Editor:
In “Rate-Base Cleansings: Rolling Over Ratepayers” (November 2005, p.58), Michael Majoros urges state public utility commissions to recognize a refundable regulatory liability for past charges to ratepayers for non-legal asset retirement costs.
Incentives for transmission investment could boost postage-stamp pricing over license-plate rates.
FERC proposed a new set of regulations, under the new section 219 of the Federal Power Act, explaining in broad outline how it might approve generous financial incentives for new investments in transmission—incentives once dubbed as “candy.” As of mid-January, the new NOPR had spawned more industry comment than just about any other FERC proposal in recent memory.
Total shareholder return can not only be a measure of past performance, but it can be harnessed as the prime touchstone for planning future performance.
Tim Gardner and Eric Spiegel
TSR is a paradox among financial metrics—dominant in assessments of past performance yet peripheral in plans for future performance. This paradox can be resolved.