David L. Goodin became president of Montana-Dakota Utilities and Great Plains Natural Gas. ONEOK announced three new officer appointments. Duke Energy named Bruce H. Hamilton as vice president of McGuire Nuclear Station. PJM named W. Terry Boston its new president and CEO. And others...
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.
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.
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.
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.
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.
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.
By abandoning R&D and marketing, the gas industry may have sealed its own fate.
Gas producers and utilities have all but abandoned R&D and marketing. Is it too late to reverse the death spiral, or can the industry learn from other check-off marketing successes?
Process changes prepare ComEd to recover quickly from disastrous storm and flood.
Sometimes a bad storm provides the best training ground for a truly terrible storm. An outage in 2006 taught ComEd lessons that helped it recover quickly from the floods of 2007.
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.