Despite market turmoil, state commissions refuse calls for an ROE boost.
(November 2011) Our annual survey of rate cases shows that despite volatility in financial markets, state regulators are holding utilities to a high standard for boosting their returns on equity (ROE). The latest data is added to Fortnightly.com's exclusive online ROE survey database, the largest free source of rate case information anywhere on the Web.
1. ‘Policy’ Guides the Grid; 2. Carbon Not a Nuisance (Yet); 3. Gigabucks for Negawatts; 4. A MOPR, Not a NOPR; 5. Ramp Up the Frequency; 6. Cap-and-Trade Still Lives; 7. Cyber Insecurity; 8. Korridor Killer; 9. The Burden Not Shared; 10. Ozone Can Wait.
How we got here and what to expect.
New air quality regulations, including the Cross-State Air Pollution Rule, have prompted substantial investments in emission control upgrades. But a series of additional standards—for mercury, toxins, cooling water and ash residue—are driving delays and shutdowns in the coal-fired power fleet. Investment decisions depend on a clear understanding of where EPA is headed, and how the new regulations will affect generators’ costs—and market prices.
Has the Supreme Court frozen climate change litigation?
The Supreme Court’s decision in American Electric Power v. Connecticut strongly limits private nuisance actions against greenhouse gas (GHG) emitters by keeping these cases out of federal court. But the AEP decision won’t stop lawmakers from enacting new GHG regulations, and it won’t prevent plaintiffs from suing emitters in state courts.
From EPAct to Order 1000, siting authority continues evolving.
Six years after Congress granted FERC “backstop” siting authority for electric transmission projects in the Energy Policy Act of 2005, the regulatory landscape is still evolving as a result of federal court decisions and new FERC orders. But despite a lack of certainty at the federal level, project sponsors have filed numerous applications at the state level for new transmission projects. Can these projects proceed without greater certainty at FERC?
Riverstone/Carlyle acquire eight power plants; Entergy pays $346 million to NextEra for Rhode Island plant; plus asset sales by First Energy and Thermo Cogen, and debt issues by MarkWest, Atlantic Power, Mississippi Power, and SCE totaling $1.6 billion.
Are merchant power assets overpriced?
By some measures, merchant power assets look like a bargain, selling for well below their replacement cost. But whether low prices signal a buying opportunity or a value trap depends on the outlook for electricity demand growth—not just in the long term, but also in the fairly immediate future.
The old rules don’t always fit with new commercial realities.
To encourage billions of dollars of investment into America’s transmission grid over the next several decades, the Federal Energy Regulatory Commission (FERC) is restructuring its regulatory policies to bring market-based solutions into the framework for planning, construction, and operation of new transmission lines. The recent Order 1000 is the most dramatic example of this effort. But as FERC has learned before, one set of rules doesn’t serve the financial and commercial needs of all market participants.
Engineering and construction firms adapt to a changing market.
Engineering, procurement and construction (EPC) contracts are evolving as utilities seek to spread risks, contain costs, and execute their business strategies. As a result, turnkey contractors are adapting their capabilities to meet the industry’s changing needs. Leading EPC firms share their vision for a 21st century energy industry—and their role in building it.
Does the lack of long-term pricing undermine the financing of new power plants?
The PJM Interconnect’s Reliability Pricing Model generally has succeeded in attracting and retaining low-cost generation and demand resources to maintain resource adequacy. But sluggish demand and low prices have weakened the market for long-term capacity contracts. Suppliers aren’t willing to lock in current low prices, and buyers don’t want to pay more for future certainty. Is the market dysfunctional, as some state lawmakers suggest, or does the lack of long-term contracts indicate a rational balance of supply and demand?