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Fortnightly Magazine - February 15 1999

Midwest vs. Northeast? EPA's NOx Policy

Eight states blame upwind sources. Agency to revisit emissions targets.

The U.S. Environmental Protection Agency's Sept. 24 rule for 22 eastern states to file plans to reduce nitrogen oxide emissions would ostensibly reduce transport of ground-level ozone, or smog, in so-called "nonattainment areas." But eight of these affected states have filed petitions arguing that NOx emissions blowing in from nearby jurisdictions must be controlled before they can comply.

So far, in preliminary statements, the EPA has indicated that at least some of these petitions have merit.

Byline: 
Regina R. Johnson and Lori M. Rodgers
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The Low Cost Dilemma

Washington State Studies Electric Competition

Meeting its Dec. 31 deadline, the Washington Utilities and Transportation Commission delivered to the state legislature its "Electricity System Study 6560", a joint effort with the state Department of Community, Trade and Economic Development (CTED) as required by Engrossed Substitute Senate Bill 6560, on retail electrical consumer protection.

Byline: 
Bruce W. Radford
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Setting EDI Standards: Business Beats Technology

Northeast states avoid meter squabbles, stress electronic commerce.

It ain't the chip, it's the interface. That's the ticket in New England and the Northeast, where utilities, power producers, retailers and marketers are standardizing electronic data transfers of customer lists, enrollment choices, energy consumption and billing determinants - the business information that will be prove essential to a working competitive market in electricity.

Byline: 
Bruce W. Radford
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Off Peak

Co-ops beat utility rates in 15 states. But why not more?

Despite the fact that their customers are scattered throughout the most remote reaches of the 46 U.S. states they service, electrical cooperatives in 15 states offer residential rates lower than the averages for all utilities in those states.

A comparison of 1997 rates by the National Rural Electric Cooperative Association finds that another 24 states have rates that are just 1 to 10 percent higher than the utilities' state averages.

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Retail Wizardry: How To Make Money in Today's Power Market

A hedging strategy to protect gross margins in a fixed-price mass market.

The retail electricity markets in the United States are set to bloom. Retail power marketers presently must navigate various hurdles, raised by incumbent utilities, before they are able to establish a foothold. Some states, however, including Pennsylvania and Massachusetts, have established a fixed schedule for the recovery of stranded costs, resulting in profit opportunities for new entrants.

Byline: 
Michael C. Hsu, and Nguyen T. Quan
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The Fortnightly 100 Revisited: Do Utility Stock Prices Reflect Operational Efficiency?

The numbers say "yes," adding weight to last year's benchmarking survey.

Does productive efficiency help determine an electric utility's prospects in regulated or competitive markets? Is productive efficiency a better marker of real-world success than simple financial attributes, such as cash flow, dividend ratio or operating income?

In unregulated markets, higher productivity translates directly into relative declines in costs and prices, and by extension, greater ability to compete and prosper.

Byline: 

Hossein Haeri, Matei Perussi, and M. Sami Khawaja

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Generating Plant Sales and Acquisitions: Who's Doing What, and Why

Sales prices for power generation assets in the United States during the past two years have climbed to unprecedented levels. This trend should continue. More than 20,000 megawatts of generation assets have been sold, with another 20,000 MW announced. During the next five years, it is expected that 70,000 to 140,000 MW will change hands. We have seen only the beginning of a massive redistribution of generation assets - from regulated utilities to unregulated marketers and plant operators.

In fact, the prices we've seen for generation assets may turn out to be bargains.

Byline: 
Dean Maschoff, James Pardikes, David Thompson, Michael Rutkowski, and Nainish Gupta
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Frontlines

Micro maverick Bill Althouse sees a grand conspiracy to blot out customer-owned generation.

Distributed generation is out of the box. It's time for regulators to wake up. The paradigm has already shifted."

That's Bill Althouse talking, president of Althouse Inc. of Albuquerque, N.M., a seat-of-the pants business (he says he's near bankruptcy) that helps homeowners and businesses install on-site generation. I met him via email as I researched why, on Jan.

Byline: 
Bruce W. Radford
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People

The Natural Gas Supply Association promoted John H. Sharp and Philip M. Budzik. Sharp, the association's chief lobbyist and counsel since 1988, became vice president, federal and state government affairs, and counsel. Budzik, previously director of research and analysis, was named vice president, federal regulatory affairs and technical analysis.

Bob Wentland joined Coherence Technology Company Inc. as research geophysicist. Wentland also is the manager of product development for CoherentVision(. Wentland's career includes 16 years with Shell Oil Co.

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Benchmarks

The future contract for July delivery at cinergy remains at levels reminiscent of last year's prices. At one point the contract reached $170 per megawatt-hour, matching last year's actual average price during June and July. High forward contract prices such as this show that market traders believe that spot prices for electricity will again be sent to four-digit levels.

Three primary factors led to last year's price spikes. First, nearly 23 percent of the capacity in the Midwest was unavailable during June.

Byline: 
Christopher Seiple
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