Frontlines & Op-Ed

Barbarians at the Gates

FERC... SEC... CFTC...Congress ... Ratings Agencies... Stockholders... Bondholders... Private Equity Investors?

No one has yet quantified or qualified the devastation to industry reputation, electric competition, or energy companies' future earnings power caused by the current round of energy trading scandals that is shaking the industry to its core.

Bursting The Bubble

Merchants' trading volumes and revenue are still too inflated.

In the post-Enron world, many continue to question the legitimacy of the practice of inflating revenues through the trading business to bolster the company's financial picture.

Point-Counterpoint

Letters to the Editor

David Moore: Chris King’s article, “How Competitive Metering Has Failed,” (Nov. 15, 2001) overstates both the weight the CBO report places on the demand side of the electricity market and the importance it assigns to advanced metering therein. King responds: While Mr. Moore and I seem to disagree on the semantics, it appears that we are in violent agreement on the big picture, as stated in the CBO report.

Biting Pat Wood's Hand

FERC finds the states have teeth, too.

FERC Chairman Pat Wood ought to be commended for trying to extend a hand of cooperation to state PUCs. But certainly he must by now understand that the nature of the state regulator, as the nature of the wolf, is unchangeable.

Letter to the Editor (May 15, 2002)

EPSA exec rebukes McCullough's claims.

A response to the article "Revisiting California," April 1, 2002: If the issues confronting California’s ratepayers weren’t so important, it would be easy to say that Robert McCullough’s efforts are best published on April Fools Day.

Indecent Disclosure?

Most pan FERC NOPR, but gas association eyes FERC role.

Citing overlap with the Securities and Exchange Commission (SEC), the power industry has largely panned FERC’s proposals to require greater disclosure on financial instruments and derivatives.

Three-Legged Stool

The smart money now treats transmission as a player. Just like generation. Just like load.

Over at the Federal Energy Regulatory Commission, new chairman Pat Wood has let it be known if he had been in charge, he would have postponed Order 2000.

A Winning Proposition?

A response to Bruce Radford’s “100-to-1 Odds, Why merchant transmission still looks iffy,” in the March 1, 2002 issue.

Competitive transmission is already a proven and sound business model. With the right regulatory rules, competitive transmission can make major efficiency improvements to the existing transmission system.

The Doomsday Scenario

Debt + secret triggers = another Enron.

Much the same way that bankers used to worry about a “run on the bank,” where there is an overwhelming demand for liquidity that causes a solvent bank to fail, so should energy companies be worried that their use of material adverse change (MAC) clauses might trigger an overwhelming demand for liquidity that causes a once solvent energy company to fail. Of course, the banks now have the Fed to protect the financial system from a liquidity crisis. No such luck for the energy industry.

Politically Inelastic?

Electric pricing issues are hard to overcome.

Do politicians really mean what they say when they call for competitive markets in electricity at the wholesale and retail levels? Rivals of California Gov. Gray Davis champion competitive electric markets. But what if, after elections, California markets are then fixed (with unanimous consent), and prices continue to be high? Will that politician still stand behind competitive markets?