Law & Lawyers

The new capacity brought on line in 2003 and 2004 likely will not drive down market prices but may well provide a measure of reliability to the market, possibly counteracting some of the usual price volatility seen in low hydro years. This is good news for the wholesale power business, and it signals that the industry is beginning to claw its way back from the near-death experience of the past few years.

Incentive regulation can provide benefits both to utility shareholders and customers by encouraging greater efficiency. But even if incentive regulation supplants traditional COS regulation, regulators and utilities still will need to confront the same basic ROE questions that have vexed both for many years. Because the base ROE under incentive regulation will be an integral part of the incentive structure itself, it ought not to be done as an afterthought. The approach described here is one way to address this important issue.

The natural gas market is approaching a dramatic turning point. The fundamentals in the energy markets are converging to increase the need for incremental gas storage and the way that storage is used and valued by the customer community.

It’s quite remarkable how the Federal Energy Regulatory Commission (FERC) has been able to pound a square peg into a round hole. With not much more than a wink and a smile, FERC has taken a depression-era law meant for monopolies — the Federal Power Act — and has made it serve double duty as a foundation for competitive power markets. Yet FERC’s reinterpretation, for all its good intentions, may prove inadequate in the long run to define and support full-fledged energy markets.