Southern Company named Ronnie Labrato vice president, internal auditing. FirstEnergy’s board of directors elected Gary R. Leidich executive vice president and president of FirstEnergy Generation, and Richard R. Grigg executive vice president and president of FirstEnergy Utilities. Exelon named Ian P. McLean to lead its finance and markets organization. And others...
U.S. utilities are gaining valuable lessons from technology developments abroad.
Structural and regulatory factors have allowed utilities in some countries to leapfrog America’s utility industry in terms of technology leadership. But U.S. utilities are learning valuable lessons from international advancements.
Emerging capacity auctions offer limited but valuable risk-management tools for asset owners.
Fast forward to today’s partially deregulated electric power markets. Wholesale electric energy often is traded in various central markets, as well as among individuals in bilateral transactions. Wholesale electric energy prices largely are deregulated, and clearly, over the past decade, market participants have become adept at routinely charging much more than their variable production costs. This “rent extraction,” as economists commonly call it, can take various forms, and while the mechanism for achieving it can be complicated, the evidence is quite clear that today’s wholesale electricity prices typically are higher than the variable costs of most or even all suppliers.
Why developers today are often kept waiting to get projects ok’d to connect to the grid.
Late last year FERC learned that the Midwest regional grid likely would require at least 40 years — until 2050 — simply to clear its backlog of proposed gen projects awaiting a completed interconnection agreement to certify their compatibility with the interstate power grid. But grid engineers would meet that date only by shortening the process and studying multiple projects simultaneously in clusters. To apply the process literally, studying one project at a time, as envisioned by current rules, the Midwest reportedly would need 300-plus years to clear its project queue.
ERCOT utilities approach CIP compliance from varying perspectives
As proposed by the North American Electric Reliability Corp., the new critical infrastructure protection (CIP) standards charge utilities with identifying their own critical assets and related cyber systems. This approach allows great flexibility for utilities to apply the CIP standards to their particular situations. This will help ensure that their efforts focus on securing critical assets, rather than on complying with an overly prescriptive set of mandates that might or might not yield a secure grid.
Utilities are gearing up for cyber security compliance. Will the standards prove worthy?
The NERC CIP standards represent an historic achievement. They include the first mandatory cyber security requirements of their kind to be imposed on a U.S. private-sector industry. Considering the scope and sensitivity of the grid-security issue, developing a set of enforceable standards inevitably would entail a complex and contentious process. From that perspective, NERC, FERC and the industry have made remarkable progress, and their efforts deserve accolades.
NERC’s new cyber security rules may minimize cost of compliance, but they leave utilities guessing on how to identify risks.
Liam Baker, vice president for regulatory affairs at US Power Generating, questions whether his company’s power plants and control systems in New York and Massachusetts must comply with the electric industry’s new mandatory standards for cyber security. Baker voiced his doubts in written comments he filed in October with FERC.
Increasing prices for materials, equipment and services are driving utility infrastructure costs into uncharted territory.
Greg Basheda and Marc Chupka
The evidence is overwhelming: After a decade of relatively stable, or even declining, construction costs, the industry is now facing a prolonged period of elevated construction price tags. What are the causes behind this trend, and how might the cost increases translate into higher rates?
Tech experts weigh the options for improving power delivery.
We’ve heard it all before, but the issue isn’t going away: Reliability of power, from generation to distribution, remains a primary concern of the utility industry. But the current verdict is mixed, depending upon which experts you talk to. Aging equipment is a ticking time bomb—except when it isn’t. NERC CIP standards are driving reliability improvements—except when they aren’t. Maintenance is key—except where monitoring and automation are more important. And regulators should stand aside and let the market drive reliability improvements—but economic incentives wouldn’t hurt.
FERC would relax price caps—sending rates skyward—to encourage customers to curtail loads.
About four months ago, at a conference at Stanford University’s Center for International Development, the economist and utility industry expert Frank Wolak turned heads with a not-so-new but very outrageous idea.