Fortnightly Magazine - January 2005

IT Roundtable: The Digitized Grid

Data gathering and controllability offer the quickest path to reliability.

Technology leaders at Pacific Northwest National Laboratory, the Electric Power Research Institute, and the National Rural Telecommunications Cooperative present their visions of energy IT in the 21st century.

Reversing the Gas Crisis: The Methane Hydrate Solution

Commercialization of methane recovery from coastal deposits of methane hydrates could head off an impending gas shortage.

More than half of the Earth’s organic carbon is in the form of methane hydrates—also known as the ice that burns. U.S. potential is at least 100,000 Tcf., but commercial production has not been achieved.

Coal Gasification Gets Real

The technology works, but public policy will dictate its future.

The future of integrated gasification combined-cycle (IGCC) power plants depends on public support, but environmental and market factors are helping IGCC look like a winning technology for the future.

A Better Merchant Mousetrap?

The failure of the Empire Connection spells trouble for private transmission projects.

It’s at the very heart of all policy initiatives for both electric generation and transmission: How do you attract the right amount of investment without creating an overbuilt market, or a boom-bust scenario? In recent months, utility executives, financiers, and policy-makers have been asking this question with even greater zeal than usual.

People (January 2005)

AGL Resources announced the reorganization of its six-state territory into two divisions. Briggs L. Tobin was named GE's senior counsel for transactions. The Board of Directors of CH Energy Group Inc. appointed Joseph J. DeVirgilio Jr. to the position of executive vice president of corporate services and administration. And others ...

Merchant-Energy Bottom Fishers

Private equity rolls the dice.

One way some new players in the power generation market are looking at the valuation is to separate out “extrinsic” value and apply a higher discount rate or “haircut.” An alternative approach is to price the “whole curve” on a risk-adjusted basis.

Navigating the Gray Areas

Successful energy market development means understanding new subtleties and nuances.

A recent McKinsey article proclaimed, “More progress has been made improving the governance of U.S. corporations during the past couple of years than in the several decades preceding them." Yet, revelations from the disgraceful behavior associated with Enron and related events continue to surface and confuse the issue of what is needed today to move energy markets forward.

LICAP and Its Lessons: A Kink in the Curve

Doubts intensify over New England’s radical new market for electric capacity.

What began nearly two years ago as a simple request by power producers to boost their chances for recovering fixed costs for several power plants in Connecticut has mushroomed into the single most complicated case now pending before FERC.

Merchant Power: Ratepayers Back At Risk

A review of power plant deals in 2004 shows that utilities are buying.

Whether evolution or devolution, the merchant deals done to date show movement to a familiar structure; ratepayers are back at risk. While ratepayers have benefitted from merchant plants, they also paid since competition began with PURPA in 1978, and many of the acquisitions put them at risk for future changes in power values and fuel costs.