Guessing Mother Nature's Next Move
What can be done to improve weather prediction and load forecasts?
Improving the day-ahead weather and load forecast by just 1 degree Fahrenheit would have huge financial benefits for the industry.
Law & Lawyers
People
(August 2005) President Bush nominated Joseph Kelliher to chairman of the Federal Energy Regulatory Commission. Xcel Energy named Richard C. (Dick) Kelly CEO. And others...
Wholesale Competition: The Big-Bang Effect
Consider the opening of the PJM market, and its effect on prices.
Wholesale competition is working, and the best evidence to date is the savings produced from the opening of the PJM market to competitive power generation from the Midwest. A real-time case study unfolded before our eyes in May and October 2004.
Letter to the Editor
Chris King and Dan Delurey provide additional analysis for their recent paper, “Energy Efficiency and Demand Response: Twins, Siblings, or Cousins?” Fortnightly, March 2005.
Efficient Frontier: A Brief Overview
The efficient frontier is a portfolio analysis concept designed to assess risk vs. return for an investment portfolio.
The efficient frontier is a portfolio analysis concept designed to assess risk vs. return for an investment portfolio. While the financial projections of individual assets are key to the analysis, the end result is critical to successful structuring of the portfolio as a whole. Key to the efficient frontier is that it represents the highest level of a portfolio's return for any given level of risk. It can be applied to physical assets, as well as financial instruments—simultaneously. Figure 1 displays a typical efficient frontier chart.
New Jersey’s BGS Auction: A Model for the Nation
Internet procurement may be used in other states.
Since 2002, the annual energy auctions created and administered by the New Jersey Board of Public Utilities have proven to be an innovative and successful way to meet our state's growing demand for electricity. We were the first state in the nation to procure most of its electric needs through an Internet-based auction. We will keep moving forward at a measured, prudent pace on hourly pricing.
People
(September 2005) The Consolidated Edison Inc. board of directors elected Kevin Burke as a member. Great River Energy named Greg Ridderbusch vice president, business development and strategy. Millennium Pipeline named Dick Leehr as president. And others...
Building the Perfect Generation Portfolio
Finding and applying the efficient frontier.
Buyers of power-plant assets use a number of tried-and-true approaches to asset valuation, including discounted cash flow and option-pricing models. While the valuation approaches employed generally are sophisticated, they focus almost exclusively on individual assets. Conspicuously missing is consideration of the asset portfolio as a whole. For illustrative purposes, we performed an assessment of a basic new power-plant portfolio. The results are well suited for general risk analysis and risk management, portfolio planning and restructuring, power plant acquisition, development, and divestiture.
Capital Management: The Missing Performance Driver
Does your company measure up?
Few companies achieve sustainable high performance. Markets change but companies fail to adapt, and investors are unforgiving. Utilities, and new entrants, learned this lesson during the first competitive market cycle of the late 1990s and early 2000s, when few companies sustained a high-performance leadership.
The Fortnightly 40 Financial Ratings
Which is the best energy company?
(September 2005) Top honors in our first annual financial ranking go to those staying with the basics and to those dealing with soaring commodity prices.