Fortnightly Magazine - October 2005

Entergy on Edge

Can a single utility dispatch a regional grid system without a financial market?

Now comes Entergy’s pending plan to create an “Independent Coordinator of Transmission” to manage certain grid operations. On the surface, the plan would create independent accountability for the transmission grid, as called for in FERC Order No. 2000, with special attention paid to planning and expansion. Will the model work? Can it improve grid access for IPPs and reduce energy costs for Entergy’s ratepayers?

Big-Time Mergers? Not So Fast, My Friend...

 

Whole-company deals may not take off with PUHCA repeal.

One simple line in the recent Energy Policy Act sets the stage for broader geographical ownership by current utilities and easier ownership from outside industries. Readers know very well that one line calls for the repeal of the depression-era Public Utility Holding Company Act, and many pundits have stated that a wave of mergers and acquisition activity is now imminent.

Risking a Green-Power Outage

Will eco-power survive the next five years?

"If you build it they will come" has not proven to be applicable for green-power programs. Utilities have to build their programs in the right way, with the right rewards and incentives—then the customers will come. If utilities do not do this, then the effort to expand renewable energy markets will suffer a great setback, one from which it will take many years to recover.

CFOs Speak Out: Looking Beyond Power

Chief financial officers discuss new strategies and the possibility of further convergence inside and outside the energy industry.

A whole new cast of characters is expected to enter the energy industry—overseas ventures, telecom firms, insurance companies, and financial-services groups. But even as the future seems to hold boundless opportunity, utility executives and industry experts continue to disagree on what sort of consolidation is right.

Utility M&A: How Many Deals, and How Soon?

By opening the field to far-flung deals, PUHCA’s repeal changes the merger game.

The repeal of the 1935 Public Utility Holding Company Act has attracted a surprising amount of attention in the business and consumer press. But while some analysts predict a wave of utility M&A activity, others are more sanguine about the change.

Following Up on a Capital Performance

Utility stocks have outperformed the broader market. Can the industry deliver a show-stopping second act?

The utility sector has been one of the best performing sectors in the equity capital markets for more than two years. In many respects, this has been a case of the rising tide lifting all ships.

The Energy Policy Act of 2005: Two Views

What the legislation says about a national strategy.

Now that the Energy Policy Act of 2005 has had a chance to sink in, a review of the bill's perks and pork is in order. Supporters of the 1,724-page piece of legislation laud it as a triumph of job-creating bipartisanship that attempts to shore up our energy supply, while detractors call it a gargantuan giveaway to a well-heeled industry.

A Welcome Truce in the Electricity Wars

Let's enjoy this brief period of diminished acrimony before implementation of this landmark law.

In a time of record high gasoline prices, war, and increasingly shared global climate concerns, it is lamentable that the Energy Policy Act of 2005 does so little to address these critical issues. Within the narrower context of policies primarily affecting the electric power industry, however, this is a much more significant piece of legislation, and it includes a few accomplishments bordering on the extraordinary.

A Low-Voltage Energy Bill

While a few provisions are worth embracing, most of its 1,724 pages represent a waste of good timber.

After four years of legislative trench warfare, contentious legal wrangling, and heated partisan rhetoric, President Bush finally got what he wanted—a really big energy bill. What he did not get, however, was an internally consistent "national energy strategy." Examination of the legislation reveals that its title—the Energy Policy Act of 2005—is less descriptive than the title popularized by Sen. John McCain: the No Lobbyist Left Behind Act of 2005.

Beyond Sarbanes-Oxley

Energy Trading & Risk Management: How to evaluate risk and improve decision-making capabilities.

With a heightened focus on risk management, it has become increasingly clear that traditional risk-management approaches do not adequately identify, evaluate and manage risk. An ERM approach integrates risk management with existing management processes, identifies future events that can have both positive and negative effects, and evaluates the effectiveness of strategies for managing the organization's exposure to those possible future events. ERM transforms risk management to a proactive, continuous, value-based, broadly focused, and process-driven activity.

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