Fortnightly Magazine - August 2004

Global Warming: The Gathering Storm

Russia resurrects the Kyoto Protocol and the prospect of either mandatory CO<sup>2</sup> emissions cuts for U.S. utilities, or the start of a global trade war.

Russia resurrects the Kyoto Protocol and the prospect of either mandatory CO2 emissions cuts for U.S. utilities, or the start of a global trade war.

In June 2001, the Bush administration withdrew an earlier campaign pledge to support the Kyoto Protocol, claiming that the treaty was fatally flawed in not requiring China and India to reduce carbon dioxide (CO2) emissions and that the science underpinning the treaty was not yet definitive enough to justify the costs of compliance.1

Long-Term Power Contracts: The Art Of The Deal

Long-Term Cooperative Supplier Relationships

Buyers generally acquire a mix of long- and short-term contracts, with the goal of finding the optimal trade-off between price and flexibility.

For both buyers and sellers, forward contracts guarantee the exchange of a known quantity of goods at a known price and for a given time frame. From the buyer's perspective, such a contract not only guarantees delivery of a critical good, at an agreed upon price, but also reduces the costs of procurement operations, as prices do not have to be negotiated continually.

Solving The Crisis In Unscheduled Power

While NAESB and NERC struggle over the issue, North America steadily drifts toward unreliability.

While NAESB and NERC struggle over the issue, North America steadily drifts toward unreliability.

Time is running out. It's been more than two years since the North American Electric Reliability Council (NERC) Joint Inadvertent Interchange Taskforce (JIITF), on which I served, issued its white paper[1] proposing how to price the unscheduled power (inadvertent interchange)1 flowing between NERC-certified balancing authorities (BAs).

Frontlines

Did FERC's market power ruling go too far?

Frontlines

Did FERC's market power ruling go too far?

Will utility executives and proponents of electric competition mark July 8, 2004, as a dark day? That was the day the Federal Energy Regulatory Commission (FERC) said it would make no changes to the extremely contentious "interim" screen-the one it adopted back in April to measure market power in electric generation.

People

New Opportunities:

People

New Opportunities:

The Federal Energy Regulatory Commission appointed Joseph H. McClelland director of its Division of Reliability in the Office of Markets, Tariffs, and Rates. McClelland is general manager of the Custer Public Power District in Nebraska.

Colorado Gov. Bill Owens appointed Carl Miller, a state representative, to the Colorado Public Utilities Commission (PUC). The reports that Miller cannot seek re-election because of term limits.

Power Measurements

Energy trading returns, healthier and wiser.

Power Measurement

Energy trading returns, healthier and wiser.

The recent announcement of a trading joint venture between TXU and Credit Suisse First Boston (CSFB) is the latest in a series of positive news items supporting the return of energy trading. Wall Street firms continue to expand into the energy-trading sector, with Citigroup as well as CSFB moving into an area already well represented by the likes of Morgan Stanley, Goldman Sachs, and UBS.

Perspective

Congress should not impose a federal renewable portfolio standard (RPS).

Perspective

Congress should not impose a federal renewable portfolio standard (RPS).

Since 1978, the federal government has relied on tax incentives to promote the generation of electric power from renewable resources-"green" power from hydroelectric facilities and windmills, solar panels and photovoltaic cells, facilities that burn biomass, municipal waste and landfill gas, and geothermal and ocean thermal resources.

Commission Watch

Assimilating the best of the regulated-utility and merchant models.

Commission Watch

Assimilating the best of the regulated-utility and merchant models.

Vertically integrated utilities (VIUs) have served us well and do not need to be dismantled in the name of competition.

Business & Money

Credit-rating linkage harms certain power companies. Ring-fencing is the best answer for regulators.

Business & Money

Credit-rating linkage harms certain power companies. Ring-fencing is the best answer for regulators.

In recent years, a persistent battle has developed between state public utility commissions (PUCs) and holding companies over the negative financial and operational impacts on regulated utilities of failed diversification investments. Ratepayers expect to compensate companies for the costs of providing utility service-not those costs associated with the unregulated activities of affiliated companies.

Technology Corridor

EPRI challenges the industry to modernize the grid.

Technology Corridor

EPRI challenges the industry to modernize the grid.

At a time when a secure and reliable electricity infrastructure should be one of our highest priorities, we find ourselves with a system that is increasingly vulnerable to power quality problems and to intrusion, both natural and man-made. The constraints on utility investment that have brought us to this state must be released so that we can move forward to enable a truly digital society and economy.

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