California Public Utilities Commission

Natural-Gas Procurement: A Hard Look at Incentive Mechanisms

Better designs are needed to realize the goal of lower-cost gas.

A gas procurement incentive mechanism that provides strong incentives for a broad range of procurement-related costs and revenues, using a benchmark that is both exogenous and adaptive to external circumstances, can benefit consumers.

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.

The CIO Forum: The Changing Face of Energy I.T.

Budgets are expected to increase, even as new IT challenges present themselves.

In our annual technology forum, we talk with tech/information specialists at four companies: Patricia Lawicki at PG&E; Ken Fell at the New York ISO; Mark C. Williamson at American Transmission Co.; and John Seral at GE Energy.

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.

Focus on LNG Siting: A State Perspective

Congress revamps LNG and storage, giving broad new powers to FERC. Why the Feds still must consult with local authorities.

A major objective of the Energy Policy Act of 2005 (EPACT) is to counter the worsened conditions in the natural-gas market that began in 2000 and are expected to continue over the next several years—namely, tight natural-gas supplies and high, volatile gas prices caused by a distinct shift in the supply-demand balance. Any noticeable reductions in gas prices that might be effectuated by the act will have little impact on natural-gas prices for a number of years.

Commission Watch

FERC mulls rival plans at the last minute, while on the West Coast, California gets into the game.

FERC, the ISO, and many other parties had seen no reason for further debate over the need for a location-specific capacity market. By limiting debate, FERC had foreclosed a raft of competing ideas. When the moment finally arrived for the oral argument at FERC, attorneys and witnesses attempted valiantly in the precious few minutes allotted each speaker to flesh out new ideas, and the commissioners struggled as well to keep up. This highly unusual situation made for a helter-skelter hearing, with new topics seeming to come out of the woodwork.

Utility M&A: How Many Deals, and How Soon?

By opening the field to far-flung deals, PUHCA’s repeal changes the merger game.

The repeal of the 1935 Public Utility Holding Company Act has attracted a surprising amount of attention in the business and consumer press. But while some analysts predict a wave of utility M&A activity, others are more sanguine about the change.

Squeezing Scarcity From Abundance

California's pursuit of a centralized administrative solution in reliability hinders everyday operational issues.

California’s pursuit of a centralized administrative solution in reliability hinders everyday operational issues.

Merchant Power: Ratepayers Back At Risk

A review of power plant deals in 2004 shows that utilities are buying.

Whether evolution or devolution, the merchant deals done to date show movement to a familiar structure; ratepayers are back at risk. While ratepayers have benefitted from merchant plants, they also paid since competition began with PURPA in 1978, and many of the acquisitions put them at risk for future changes in power values and fuel costs.

State Regulators: Driven By Reliability

Can natural gas supply keep up with demand for power?

STATE REGULATORS:

Can natural gas supply keep up with demand for power?

Interviews

Things are looking up for the energy industry, but tough issues remain. Regulators-forced to grapple with the mismatch between volatile natural-gas prices and years of building gas-fired power plants-have learned a thing or two. They now insist on new rate schemes and risk-management methods while promoting the use of liquefied natural gas.