The industry is getting more complex every day. Senior executives at Southern Company, PPL, TXU Energy, Direct Energy and PJM discuss business trends, resource strategies, electric vehicles and customer engagement in the smart-grid era.

Making the business case for the smart grid is an important utility goal. It provides the justification for making or deferring required investments. Utilities might find it necessary to engage in a cycle of continuous strategic planning.

Much is riding on successful smart-grid deployments. Experiences at several utilities demonstrate the costs and benefits of today’s automation technologies.

Smart grid technology is bringing inanimate objects to life. In connecting nodes and equipping the system with distributed intelligence, the network is developing toward an environment that becomes quasi-biological over time. Such an organic system might defy deterministic ideas of planning and control.

Despite state efforts to follow the European model of state-mandated feed-in tariffs to promote renewable power, these actions won’t pass Constitutional muster. The Supremacy Clause makes a formidable legal barrier.

Sustained performance improvement is often a difficult objective to achieve in a large company. Many such attempts involve various cross-functional initiatives that leave companies with unfinished projects, lower morale and disappointing results. Commonwealth Edison (ComEd) has found that the key to sustained performance improvement is the establishment of a cadre of high-potential managers to address company-wide initiatives full-time.

Ultracapacitors and batteries work together to solve power quality problems.

ABB buys Ventyx; Powerspan and WorleyParsons CO2 capture test results; Honeywell lands Progress Energy contract; Opower releases customer engagement platform; HECO picks Siemens for smart-grid stimulus project; and MORE.

Calpine buys 5 GW of generating capacity from Pepco Holdings for $1.65 billion; Xcel buys two Calpine plants in Denver for $739 million; Asset acquisitions announced in April by Constellation, Kaukauna Utilities and others totaling $3 billion. 

Cost of capital is often a contentious issue in utility ratemaking. This is due, in part, to the inexact nature of the tools available to financial analysts and the considerable room for divergent opinions on key inputs to cost-of-capital estimation. Perhaps for this very reason, and to achieve regulatory efficiency, Canadian regulators widely adopted a formulaic approach to setting return on equity (ROE). However, an unusual degree of rancor has evolved north of the border as allowed ROEs in Canada, once at parity, have fallen near 200-basis points below their U.S. peers.