Strategy & Planning

Bond investors are keen for signs of a legitimate recovery, and will be looking to move into holdco bonds.

Congress again is embroiled in another hyper-partisan food fight that threatens to blow up into a fiscal crisis. And once again dividend-paying companies like utilities are caught in the crossfire.

The industry’s slow-and-steady pace of mergers seems to be picking up speed, as larger and well-positioned players overtake smaller and weaker targets. Realizing the greatest value from consolidation requires companies to assess their strengths and weaknesses and focus on performance improvement—both before and after a deal gets done.

As the industry resumes major capital-spending programs, utilities and their stakeholders are rightly concerned about the effects on prices. Traditional regulatory approaches expose utilities to risks and costs, and can bring rate shock when capital spending finally makes its way into customers’ bills. Pre-funding investments can provide a smoother on-ramp to bearing the costs of a 21st-Century utility system — but it also raises questions for utilities to address.

Historically, grid operators tapped into voluntary load reduction as a last resort for keeping the lights on. But now, smart grid technologies and dynamic pricing mechanisms bring vastly greater potential for using load as a dispatchable resource. Effective implementation requires advanced technologies—and also foresight in creating programs, policies, and market mechanisms.

The long-predicted future of distributed generation is now becoming a reality. Customers increasingly are installing and operating behind-the-meter generation systems, creating challenges and opportunities for utilities. ConEdison’s experience demonstrates the dangers and challenges, as well as the opportunities for becoming partners with utility customers.

New Jersey’s bid to force prices downward in PJM’s capacity market not only raises the alarm about market manipulation. It also reveals a dilemma that’s preventing new generation from being built. Incumbent interests and political motivations make PJM less attractive to investment than it should be.

(July 2012) Thanks for your enlightening editorial about the problems of feed-in tariffs for photovoltaic installations and the distortions they are causing in cost responsibilities among electric utility customers. While these issues are an immediate and growing concern, an entirely different set of problems will emerge over the next decade as the share of renewables in total generation approaches the high levels being dictated by most regulatory authorities.

Utilities are testing options for adding solar capacity to existing steam power plants. Concentrated solar thermal boosters increase plant efficiency and reduce emissions, while helping utilities to cost-effectively meet renewable mandates.