Law & Lawyers

Capacity Markets Demystified

Emerging capacity auctions offer limited but valuable risk-management tools for asset owners.

Fast forward to today’s partially deregulated electric power markets. Wholesale electric energy often is traded in various central markets, as well as among individuals in bilateral transactions. Wholesale electric energy prices largely are deregulated, and clearly, over the past decade, market participants have become adept at routinely charging much more than their variable production costs. This “rent extraction,” as economists commonly call it, can take various forms, and while the mechanism for achieving it can be complicated, the evidence is quite clear that today’s wholesale electricity prices typically are higher than the variable costs of most or even all suppliers.

Byline: 

Mark Griffith

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Transforming the SysOp

Strategic pain points require an artful approach.

Utilities are at the threshold of some of the most significant changes they have faced in their history, rivaling the passage of PUHCA in 1935. This change emanates primarily from a handful of key business drivers associated with major technological improvements (i.e., AMI, smart grid), the need for increased customer focus, increased regulatory mandates, and a changing workforce.

Byline: 

Monica Benner and Mani Vadari

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Bond Bonanza

January’s debt-issue activity portends a rush on the markets later this year.

Something seemed rotten in December. Fortnightly’s survey of utility and financial deals for that month turned up so few debt issues, we wondered if our research methods were failing. We found only one significant utility bond issue during the month; Allegheny’s West Penn Power issued $275 million in 10-year notes. December’s deathly quiet raised questions about whether we were missing most of the deals.

Byline: 

Michael T. Burr

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Coming to America

U.S. utilities are gaining valuable lessons from technology developments abroad.

Structural and regulatory factors have allowed utilities in some countries to leapfrog America’s utility industry in terms of technology leadership. But U.S. utilities are learning valuable lessons from international advancements.

Byline: 

Charles W. Thurston

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Pay-as-Bid vs. Uniform Pricing

Discriminatory auctions promote strategic bidding and market manipulation.

Some advocates claim markets can help reduce electricity prices by changing the design of wholesale auctions. However, taking a pay-as-bid approach could make matters worse.

Byline: 

Susan Tierney, et al

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Transmission Rights Row

Fiber optic lines expose grid companies to class action lawsuits.

Property owners are banding together and filing class-action lawsuits against transmission owners who sell dark-fiber capacity on their rights of way. Utilities have strong arguments against demands for hefty compensation.

Byline: 

Arnold Tesh and Deborah Haskell

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Death of a Turkey

DOE’s move to ‘restructure’ FutureGen clears the way for more rational R&D.

When President Bush announced the FutureGen initiative halfway through his first term, industry veterans instinctively understood its purpose. Nominally a public-private partnership to build a “zero-emissions” coal-fired power plant, FutureGen stood as a symbol for the administration’s climate-change strategy. It helped the government argue mandatory carbon constraints were unnecessary, because America will develop more green technology than any other country in the world.

Byline: 

Michael T. Burr, Editor-in-Chief

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Greening IOU Equities

Low-carbon strategies are yielding rewards for shareholders.

Low-carbon and “green” strategies have begun delivering returns for utility shareholders. Whether a company ultimately wins or loses depends on how markets are pricing the risks of possible carbon-control regimes.

Byline: 

Michael Rutkowski, et al.

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Snake Oil & Smart Meters

Customers deserve the straight truth about electricity costs.

The utility industry faces the difficult task of trying to educate the general public about the realities of delivering electricity service in the 21st century. California’s recent experience trying to put smart thermostats into the state’s building code provides a cautionary example.

Byline: 

Michael T. Burr, Editor-in-Chief

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Making Peace With Nuclear

When Patrick Moore left Greenpeace—the environmental advocacy group that he helped to create in the early 1970s—some activists labeled him a traitor and a corporate shill. It didn’t stop him, however, from becoming one of the environmental community’s most outspoken advocates for nuclear power development—and one of the harshest critics of anti-nuclear activists. Fortnightly caught up with Moore in February to discuss the state of anti-nuclear advocacy in America.

Byline: 

Michael T. Burr

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