Strategy & Planning

The PJM Interconnect’s Reliability Pricing Model generally has succeeded in attracting and retaining low-cost generation and demand resources to maintain resource adequacy. But sluggish demand and low prices have weakened the market for long-term capacity contracts. Suppliers aren’t willing to lock in current low prices, and buyers don’t want to pay more for future certainty. Is the market dysfunctional, as some state lawmakers suggest, or does the lack of long-term contracts indicate a rational balance of supply and demand?

Engineering, procurement and construction (EPC) contracts are evolving as utilities seek to spread risks, contain costs, and execute their business strategies. As a result, turnkey contractors are adapting their capabilities to meet the industry’s changing needs. Leading EPC firms share their vision for a 21st century energy industry—and their role in building it.

America needs an energy policy today that will bring together our best and brightest, harness the limitless capabilities of our research institutions, and invest whatever it takes to ensure America’s leadership in clean energy technologies. The result will be to create billion-dollar industries and millions of new jobs.

The balance of stakeholder interests in utility ratemaking has shifted over the past decade toward achieving social policy goals. A more sustainable balance is required if utilities and regulators hope to preserve utility service quality and affordability.

Adopting an interoperable framework for the smart grid isn’t just a question of technology standardization. It’s also about navigating the legal, regulatory, and business factors that affect technology implementation. Making the smart grid work will require utilities and regulators to assert leadership.

A wave of mergers and acquisitions is moving through the industry, as utilities and financial players position for growth and strategic advantage. Will economic and regulatory forces continue supporting these transactions? Our annual finance special report examines trends in capital markets and M&A deals involving utilities, power generators and gas suppliers.

Electric vehicles (EV) are just getting started, with rapid growth ahead. Plug-in hybrids and other EVs could capture 20 percent of the U.S. auto market by 2030. When planning for future infrastructure and technology needs, utilities face difficult questions about how EVs will interact with the utility grid. A comprehensive approach to communicating and integrating vehicle information will allow utilities and drivers to make the most of smart electric transportation.

Many utilities have trimmed their capital spending in the face of economic weakness and regulatory uncertainty. At the same time, strong energy sales have boosted cash flow and profits. Backed by regulated returns and clear resource plans, the industry should step up infrastructure investments. Are we ready to lead America out of economic malaise?

When a capital-intensive industry enters an asset-building cycle, many companies will operate in the red for a few years or more. That’s not necessarily a bad thing, as cap-ex investments represent growth for shareholders. The devil is in the details, however, and companies facing a large slug of environmental compliance investments might produce disappointing returns over the next few years.

(September 2011) Our annual ranking tracks the publicly traded electric and gas companies that produce the greatest value for shareholders. Despite the year’s topsy-turvy financial markets, perennial performers like DPL, PPL and Exelon return to the top of the list. Others face looming cap-ex burdens as regulators impose new mandates and requirements. Leading companies are positioning for growth, despite a challenging landscape.