Fortnightly Magazine - June 2005

Building a Better Utility

Many of the obstacles and strategic issues that utilities face today are all too familiar. This time they must be solved with a different business model.

We overbuild, run short, then overbuild again. You'd think we'd learn, because when the forecasts aren't accurate, when overcapacity plagues the industry, companies fail. Can we get the forecasts right? Probably not. But we can plan for forecasts that will be wrong. They always are. And they will be until the system is redesigned to let prices clear the market.

Reliability Wars

Power System Planning: Who gets paid (and how much) for backing up the system?

“Confining transmission projects to FTR payments is like confining generators to energy-only payments,” says Ed Krapels, the electric industry consultant from Boston who helped dream up the initial idea of the Neptune project. These words speak volumes on what’s happening in today’s power industry, and on what the ISOs and RTOs are trying to achieve, not only for merchant-grid projects but for merchant generation and system reliability.

Going to the Bank

Financial buyers are snapping up power plants faster than at any time in history. The asset shift represents an interim step in a wholesale-market transformation.

A dam broke last year, releasing a wave that even now is spreading through the U.S. power industry. Deals that had been languishing on the auction block for months suddenly surged forward in 2004, and assets began changing ownership at a torrential pace. Understanding what this means for the power industry requires a long-term perspective on wholesale-market trends.

The Hazards of ElectroMagnetic Terrorism

And why North American power plants should take note.

Electromagnetic terrorism has huge implications for the international power industry. The North American electric power network is vulnerable to electronic intrusions launched from anywhere in the world, according to studies by the White House, FBI, IEEE, North American Electric Reliability Council (NERC), and National Security Telecommunications Advisory Committee (NSTAC). Is there a solution for this situation?

BGS Auctions: What Price Is Right?

How to price new load-servicing contracts while incorporating market-risk analysis into such deals.

Why have basic generation service auctions historically been overly competitive given the prevailing market prices at the time? Here are four steps to determine correctly what should the bid price should be.

The Ultimate CEOs: Constellation Energy’s Mayo A. Shattuck III

The CEO Power Forum: Not all utility CEOs are created equal...

"Goldman Sachs built the platform. They came from a world of conventional procedures and compliance, and an understanding of rule sets. Almost every other wholesale platform built in Houston and run by cowboys got out of control."

The Ultimate CEOs: Anthony F. Earley Jr., DTE Energy

The CEO Power Forum: Not all utility CEOs are created equal...

"To enhance that natural utility growth of around 2 percent per year, we want to surround the utilities with a portfolio of non-utility businesses that have higher growth prospects."

The Ultimate CEOs: C. John Wilder, TXU Corp.

The CEO Power Forum: Not all utility CEOs are created equal...

"This is a real industrial company with a real consumer business. It's not a kind of governmental confected business like many of these quasi-restructured market companies compete in."

The Ultimate CEOs: Wayne H. Brunetti, Xcel Energy

The CEO Power Forum: Not all utility CEOs are created equal...

“People have approached us to outsource our call centers to India. I’m just not going to do that. To me the face of our company is our call centers. That’s our principle contact with our customers.”
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