(October 2006) Kansas City Power & Light promoted Kevin Bryant to vice president of Energy Solutions. American Electric Power announced a series of executive reassignments as part of the company’s succession planning strategy. Pacific Gas and Electric Co. elected Bill Morrow as president and COO. Bob Drennan, a 23-year Progress Energy veteran, has been named vice president of investor relations. And others...
America’s energy competition laboratory prepares to build.
The ERCOT region remains a living example of how to make a successful transition to restructured wholesale and retail markets for electricity. At the same time, the market continues to witness some significant developments. Sights are turning from recovery to the next stage of the power business cycle: The Buildup.
Market prices send investors clear signals to invest in the most efficient means for producing electricity.
Higher electricity prices have drawn sharp attention to the design of organized wholesale electricity markets—particularly to areas where residential customers’ rates will increase because multi-year rate freezes are ending. Some suggest changing the way that markets set wholesale electricity prices, or doing away with competitive markets entirely and returning to government regulation of prices. They say that the design of the markets exaggerates the effects of natural-gas price increases and unfairly rewards generators that use lower-cost fuels.
Can utilities simultaneously manage rising costs and pressing capital investment needs?
Does the utility industry have the financial strength sufficient to meet the combined challenges of: (1) sharply increasing and highly volatile fuel and purchased-power costs; (2) significant capital investment requirements; and (3) rising interest rates?
Progress has been made, but much work remains along the path to ERO completion.
FERC demonstrated strong leadership in meeting the aggressive timeline set by Congress for establishing the regulatory basis on which the Electric Reliability Organization will be created. But next summer’s peak-demand season is fast approaching. And much more work remains ahead for the industry to finish the job.
Utilities must embrace supply chains that include planning, inventory optimization, and logistics.
The procurement and supply-chain functions of today’s utility are the Rodney Dangerfield of the utility cost-cutting paradigm: They don’t get any respect. Supply chains in most industries extend beyond sourcing and e-procurement to include planning, inventory optimization, and logistics. When linked together with technology, this creates an “integrated supply chain” that provides visibility from customer to utility to vendors/strategic alliances, generating great value for the company.
Why have utilities lost millions of dollars on weather-normalization plans? Blame deprecated NOAA calculations.
NOAA’s measure of heating degree-days between a normal 30-year period and a given test year is consequently too high by 77 degrees when compared with the more accurate hourly estimates for the 30-year period and for the test year. In this case, a hypothetical Northwest utility would see a revenue shortfall of between $2 million and $5 million.
Critics say its new budget and business plan could simply duplicate the work of RTOs.
FERC granted formal certification to NERC as the nation’s sole ERO and reliability czar, making it inevitable that NERC would delegate the job of regional enforcement to its various regional reliability councils, already constituted. To understand why FERC acted as it did, turn back the clock nearly a decade.
Policymakers are setting sights on new challenges facing utilities.
Utilities in the United States are heading into uncharted territories, and the regulatory landscape is changing accordingly. To learn what it takes to tame this new territory, we spoke with three FERC commissioners, a state regulator, and a Western governor.
Some recent utility rate proceedings cast doubt on new ROE models and “risk adders.”
(November 2006) Our annual return on equity (ROE) survey broadly shows a continuing decline in the level of debate over issues specific to restructuring of the electric market. It also reveals a subtle shift back to investor requirements and overall business risks faced by regulated companies.