Forecasting the geographic distribution of demand reductions. Copyright © 2011 Consolidated Edison Company of New York, Inc.
Chris Gazze and Madlen Massarlian
As new energy efficiency programs proliferate, regulators increasingly will seek to use the associated demand reductions to reduce capital expenditures on new transmission and distribution assets. However, forecasting the expected geographic distribution of these demand reductions within the grid and integrating this information into a utility’s capital planning process is a challenging task.
Rational estimates lead to reasonable valuations.
When regulators grant changes to utility rates of return, they estimate growth on the basis of gross domestic product (GDP). But do utilities have any chance of growing at the same pace as GDP? The answer is no — with huge consequences for utilities and their consumers. With equity costs outpacing allowed rates of return, utilities aren’t being valued correctly. As a result, the industry risks falling behind other sectors in terms of infrastructure investments and technology innovation.
Balancing risks and opportunities in efficiency investments.
Hossein Haeri, Jim Stewart and Aaron Jenniges
In June 2008, the New York Public Service Commission (PSC) established the electric energy-efficiency portfolio standards for New York’s investor-owned utilities. In its order, the PSC directed utilities to file three-year energy-efficiency plans. Later that year, the PSC issued a supplemental order approving shareholder incentives for utilities successfully implementing their portfolios. If all goes according to plan, the six affected IOUs stand to earn about $27 million annually in performance incentives over three years. The structure of the incentive mechanism approved by the PSC presents risk factors that might affect utilities’ ability to realize the full earning potentials the mechanism offers.
The economy forces tough decisions.
The economy has put state commissioners and regulated utilities in precarious positions. Seven state chairmen explain how they’re applying fair rate treatment.
Volatile economic conditions push regulators in new directions.
Regulators are in the unenviable position of determining an allowance for ROE that’s fair to consumers and investors in a volatile economy. The cases that stand out this year are those in which regulators explored the limits of their discretion.
Vendors battle it out while utilities await common communications protocols.
Uncertainties about smart metering goals are hindering efforts to standardize communications protocols and feature sets. While vendors battle over standards, utilities and policy makers are moving forward anyway—despite the potential for setbacks.
When Spanish utility giant Iberdrola announced last June that it would acquire Maine-based Energy East for $4.5 billion, it signaled a potential surge in major foreign owners buying into U.S. utility companies. Fortnightly spoke with Pedro Azagra, director of corporate development for Iberdrola S.A. in Bilbao, Spain, to get an update on the acquisition, and his impression of U.S. merger-approval processes.
Recent electricity pricing argues for faster, more extensive deregulation.
Was restructuring a success? Prices provide a dispassionate analysis, showing that restructuring was poorly designed, badly executed, and focused on the wrong part of the grid. With those lessons learned, it’s time to explore ways to move forward.
The New Jersey Board of Public Utilities finds incentive programs may be a better way.
Jeanne M. Fox, Frederick F. Butler, Nusha Wyner, and Jerome May
New Jersey regulators say they have found a way to achieve conservation objectives while maintaining efficient operations, all without placing additional risk on consumers. How did they do it?
FERC lowers the bar for obtaining market- based rates for natural-gas storage.
Kenneth S. Culotta and James E. Goddard
The first regulatory changes following the passage of the Energy Policy Act of 2005 (EPACT) are starting to pick up steam—and encountering multi-faceted criticism—as the gas industry reacts.