The old paradigm—a strong inverse correlation of high interest rates and lower utility valuations—once again takes hold.
The recent breakout of the benchmark 10-Year Treasury yield from the recent mid-4 percent yield band to approximately 5 percent (with some market expectation that it may increase further) potentially has important strategic and value implications for the power and utility industry.
Does too much risk management mean leaving money on the table?
Why do energy merchants or those utilities with merchant power divisions obsess over “selling” their upside? These companies feel compelled to show steady, predictable profit streams to both the street and their stakeholders, despite the fact that they operate within one of the most volatile markets in the world. Typically, their method of achieving earnings consistency centers on the execution of complicated purchase and sales agreements that effectively lock in the price of fuel and electricity. Don’t these contracts really just eliminate the potential positive return an energy merchant strives to achieve in the first place?
Cal-ISO files a new market design, but has it traded efficiency for software?
Eyeing a launch date of November 2007, Cal-ISO at last has come forward with plans for revamping its widely disparaged wholesale market design. The formal proposal, known as the MRTU (Market Redesign and Technology Upgrade), was filed this past February at FERC.
What is leadership?
Fortnightly speaks to five CEOs who exemplify industry leadership: David L. Sokol, MidAmerican Energy Holdings Co.; Peter A. Darbee, PG&E Corp.; Jeff Sterba, PNM Resources; Peggy Fowler, Portland General Electric; and J. Wayne Leonard, Entergy.
Chairman and CEO, MidAmerican Energy Holdings Co.
“Leadership is the recognition that we are fiduciaries of the customer’s dollars and we have to be as efficient as we possibly can be because it is their money and not ours.”
Chairman, President, and CEO, PG&E Corp.
“The nature of a leader is that they set targets that you can’t accomplish by extending a ruler over the past track record in getting there.”
Chairman, President, and CEO, PNM Resources
“Any leader who thinks their job is only about articulating a grand vision is sadly mistaken. Success is 20 percent planning, 60 percent execution, and 20 percent luck.”
President and CEO, Portland General Electric
“I think in our business, meeting higher customer expectations and staying focused on that all of the time will ultimately serve your shareholders.”
CEO, Entergy
“I think it is my job as a leader to make sure that our values are always lived up to even when [they] conflict necessarily with our vision. That is what people look for at the end of the day. A leader’s role above all else is to make sure the truth is respected.”
The ability to provide reliable capacity is becoming both riskier and more costly to society and investors alike.
The ability to provide reliable capacity is becoming both riskier and more costly to society and investors alike.