Law & Lawyers

Letters to the Editor

Jim Lundrigan, New Haven, Conn.: After reading Gordon van Welie’s article (“New England: A Critical Look at Competition,”) I couldn’t help but think back to California in 2000. Van Welie, who is president and CEO of ISO New England, is trying to feed the citizens of New England the same brand of malarkey that the California ISO fed the California Public Utilities Commission in 2000 when wholesale and retail prices in California were perfectly linked and nearly succeeded in bankrupting the wealthiest state in the country.

John S. Ferguson, Richardson, Texas: The article of Michael J. Majoros Jr. (“Rate-Base Cleansings: Rolling Over Ratepayers,”) attracted my attention, because I perceive it to propose a solution—PUCs’ need to recognize refundable regulatory liabilities—for a problem that does not exist.

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Sunset on Grid West

RTOs in the region continue to struggle.

Efforts to develop more RTOs in the West came to a near standstill again after talks last year among key players Bonneville Power Administration (BPA), Grid West, and the Transmission Improvements Group collapsed over BPA’s convergence proposal. The end of talks is one more failure in a long line of failures to find consensus on an RTO approach in the West. Grid West is attempting to reorganize following BPA’s withdrawal, but its fate is indeterminate. Key issues are funding for continued development and achieving agreements with BPA and other transmission providers in the region.

Byline: 

Lawrence J. Risman, Ph.D.

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Electric Transmission: Building the Next Interstate System

We must efficiently deliver wholesale power within competitive regional markets.

When President Eisenhower was growing up in Kansas, he saw America’s byways and back roads develop to meet point-to-point needs, eventually forming a loosely connected national interstate highway network. The U.S. electric transmission system has similar roots, and it needs a similar vision to meet the needs of the 21st century.

Byline: 

Michael G. Morris

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Evolving Risks in the LNG Supply Chain

Some supplies may not make it to U.S. ports.

With the dramatic growth of the liquefied natural gas (LNG) trade worldwide and increased dependence on LNG as the gas fuel of the future, gas-utility companies at the end of the chain need to question whether the LNG chains are still safe, reliable, and well managed. But before diving in to some of the risks, it should be pointed out that historically LNG chains have been safe.

Byline: 

Paul Nicholson

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Terminal Terminations

The unclear language governing termination rights is subject to interpretation and extraordinary financial risk.

How does one determine the value of power contracts under early termination? Given the vagaries of the contracts themselves, the process is neither clear nor standard, and often results in protracted and costly litigation. Did the counterparty have the right to terminate in the first place?

Byline: 

Brett Friedman and Justin Harlow

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Rising Unit Costs & Credit Quality: Warning Signals

With increasing unit costs, the financial prospects and credit outlook for many utilities will depend on their success in passing along such costs to consumers.

The utility sector still has excellent access to the capital and credit markets. Yet, it is never safe to assume utilities will continue to enjoy the same low costs of capital. This is particularly true for companies facing compressed margins, regulatory deferrals or disallowances, and rising debt leverage.

Byline: 

Ellen Lapson

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Managing Risk: Prudence Reviews and Nuclear Projects

How to avoid the billions of dollars in costs that were disallowed during the last round of construction.

With nuclear energy again being viewed as part of the solution for the United States’ energy needs, a number of companies are starting the early permitting and licensing process. Meeting budget targets means the industry must address project-management issues and the risk of end-of-project disallowances for any company or regulator to be able to move forward with new construction.

Byline: 

Rilck Noel

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Encore for Negawatts?

Congress renews PURPA’s call for conservation and load management, but the world has changed since the 1970s.

The “N-word” in the title first appeared in this journal more than 20 years ago, courtesy of the celebrated environmentalist Amory Lovins and his widely quoted piece, “Saving Gigabucks with Negawatts” (Fortnightly, 1985). Scroll forward a few decades. With restructuring of wholesale electric markets at FERC, plus formation of regional transmission organizations and independent system operators, the game was changed.

Byline: 

Bruce W. Radford

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China's Quest for Energy

Cooperation and coordination will help the United States avoid an energy-policy confrontation.

China is seeking to acquire resources and infrastructure from all over the world, from the oil fields of Venezuela to new shipyards for building liquefied natural gas tankers in Shanghai. But the country’s acquisition pattern puts it on a collision course with the United States and the rest of the world.

Byline: 

Michael T. Burr

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Rate-Case Mania: Lessons for a New Generation

This overview of ratemaking and rate-design principles should ease the myriad tasks awaiting new rate analysts and attorneys, while provoking nostalgia among industry veterans still manning the ratemaking stations.

Byline: 

Ahmad Faruqui and Robert Earle

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