Frontlines

Constellation Energy CEO Mayo Shattuck has complained that he and the utility have unfairly been demonized in the public and in the press. In one interview with a Maryland paper, Shattuck showed distress over the verbal abuse his executives had received from angry ratepayers. And who can blame him?

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.

There’s been a lot of talk in the industry about new super powers for market enforcement, conferred by Congress on FERC in last year’s energy legislation. But this hasn’t been the case entirely. Many believe that FERC still labors at a disadvantage.

Hollywood and the media are way ahead of the politicians when it comes to the greenhouse effect and global warming. But even as utilities try to be good corporate citizens and help devise a federal or national plan, the question remains as to whether the domestic economy can achieve even a modest reduction in CO₂ releases—enough to put even a small dent in current predictions of global climate change.

With the possible exception of keeping the lights on, the merger game dwarfs just about every other question facing today’s electric utilities. The last big wave of consolidation hit in the late 1990s. Now the forecast calls for a repeat performance, but don’t bet the farm. There’s a hitch, you see. It’s today’s high commodity costs.

NERC up until now has been, in its own words, “a self regulatory organization, relying on reciprocity, peer pressure, and the mutual self-interest of all those involved in the electric system.” Nevertheless, can this tradition of kind, gentle, and voluntary consensus-building stand NERC in good stead as it seeks to transform itself in to a steel-fisted czar that would enforce mandatory standards?

You’ve heard the story. The local utility ought to be investing billions in new power plants, but the company CEO wants a guarantee from regulators for upfront costs and future operating expenses before laying down dollar one on the project. What to do? Utility CEOs attending the Edison Electric Institute’s 40th Financial Conference last month in Hollywood, Fla., were shuffling to the old rate base song-and-dance. But this time, they were working out a few new moves.

Given the free market in natural gas, why haven't prices attracted the needed infrastructure or supply? (LNG imports are actually down from last year.) What policies could have been contemplated ahead of national legislation? Or put more simply, why has supply lagged demand?

In the wake of Hurricane Katrina, the central question: Could any of this have been avoided? Many experts believe that the new authority given to FERC to enforce mandatory reliability standards, as per the Energy Policy Act of 2005, will bring greater transparency to the process of protecting critical infrastructure.

When we least expected it, the politicians finally were able to pull a multi-billion white rabbit out of their hat—enacting a comprehensive national energy law (Energy Policy Act of 2005) that will usher in extraordinary changes in the industry However, just how the new law really will affect the industry is the question of the hour, with many provisions of the law left to the interpretation of regulators.