The battle to control profit margin really boils down to a battle for the customer premises, where the serious money resides.The gas and electric industries in the United States control about $900 billion in assets (production, logistical, merchant). They employ these assets to serve about 150 million customers (counted separately for gas and electric), but they manage to offer only two rudimentary products (em molecules and electrons (em and at only two levels of service: firm (supposedly) and interruptible (obviously).
Fortnightly Magazine - September 15 1996
"Utility mentality" has become synonymous with a clinging dependence upon regulation to protect an organization from risk and competition. It also denotes momentum planning and management (em that is, using past performance to project future performance. This way of thinking made sense when companies could count on regulators to shield them from market forces and competition.
Generation: Big orDistributed power may turn
heads, but economics points
to central plants.
By Joseph F. Schuler, Jr.
By 2010, distributed power technologies will make up as much as 30 percent of new electric generation.
With President Clinton and the Department of Energy (DOE) staunchly opposed, the House of Representatives was expected to return September 4 from August recess to take up its version of a nuclear waste disposal bill that passed in the Senate on July 31 by a vote of 63-37.
Senate bill 1936 and its amendments call for a temporary storage facility at the Nevada nuclear test site near Yucca Mountain before the end of 1999.
The U.S. Court of Appeals for the District of Columbia Circuit on July 16 upheld Order 636, which required unbundling of natural gas pipeline sales and transportation services, but remanded at least six issues to the Federal Energy Regulatory Commission (FERC) for further explanation (United Distr. Cos. v. FERC, No. 92-1485, July 16, 1996).
The old shibboleth to some extent is literally true. The electric industry appears different from the natural gas industry in that demand must be matched immediately with production. No viable location comes to mind to put away some of that extra power until it is needed. But literal truth is not necessarily the whole story.
Nine of the 10 electric utility members (excluding PECO Energy Co.) of the Pennsylvania-New Jersey-Maryland (PJM) Interconnection have filed agreements and transmission tariffs at the FERC, seeking to replace the pool with a competitive power pool that would set a next-hour spot wholesale power price (to vary by location), but also allow bilateral trading.
The majority proposal would set up an independent system operator (ISO). The tariff would support poolwide open access and comparable transmission service.
On January 1, 1998, California will "deregulate" the state's electric utilities. The Western Power Exchange (WEPEX) and the independent system operator (ISO) will start up, creating an open market for wholesale power.
Sound bites from state and federal regulators.
DSM: Gas vs. Electric. Plan is approved for City of Tallahassee municipal electric and gas utility to use demand-side management to cut electric demand and use (predominantely during winter peak) through low-interest loans for natural gas equipment, even though plan will not pass RIM (rate impact measure) test. Docket Nos. 930559 et al. Order No. PSC-96-0716-FOF-EG, May 28, 1996 (Fla.P.S.C.).