cash flow

Crisis Capital

Volatile markets call for alternative financial models.

Should the power industry adapt its approach to capital markets in this environment? The answer, of course, is yes. Multiple frameworks are necessary to establish a power company’s or project’s current cost of capital, especially under volatile capital market conditions. The analyses reveal that in today’s capital markets, it is critical to balance or combine the alternative approaches to the cost of capital in order to develop a long-term view.

Carbon In Electricity Markets

Price transparency will drive GHG reductions.

In light of coming GHG legislation, price transparency is the key to achieving cleaner generation through the dispatch of lower-carbon sources.

CEOs on Change

Utilities adapt to a shifting landscape.

The U.S. utility landscape is more dynamic and uncertain than it’s been since Thomas Edison and George Westinghouse waged their infamous war over alternating current—and the results might be just as fundamental to the industry’s future.

Transmission Incentive Overhaul

FERC’s ROE incentive adder policy sends the wrong signals.

FERC is offering incentive rates to entice transmission investment. But the authors identify serious flaws in emerging policy regarding return on equity (ROE) incentive adders. Determining whether and when ROE adders are appropriate requires a more deliberative approach.

Wooing the Western Wind

How a move to bring power markets to the Great Plains has uncovered a crisis in grid planning.

They call the United States the “Saudi Arabia of Wind.” That’s due in large part to the huge potential of the Great Plains. But there’s a hole in the metaphor. Wind power development in some parts of the prairie is falling short of expectations.

The Path Forward

In the wake of the banking crisis, utilities lead the way to financial stability.

The back-to-basics trend positioned utilities and other energy companies to lead the way out of Wall Street’s mess. Despite a perfect storm of rising costs and a weakening economy, utilities and lawmakers might start a wave of investments in clean-energy assets and technology. But will Wall Street be ready to finance it?

The Fortnightly 40

(September 2008) Shareholder value remains strong as the Big Build begins. Our fourth annual ranking shows healthy growth in earnings and share prices. But as capital spending grows, dividends are shrinking and equity returns are weakening. Regulatory relationships will separate future winners from losers.

The New Breed Of Utility CFO

Strategic transformation demands more than score-keeping skills.

Several of the industry’s top-performing companies have been guided by CFOs with an expansive sense of what the finance office should offer to the business. Increasingly CFOs are developing the skills and capabilities to move beyond the traditional role of traffic cop to the more valued roles of business partner and enabler.

Private Equity Still Strong

Volatile markets create investment openings.

(June 2008) As fossil fuel prices continue increasing and alternative energy gathers momentum, the energy and utility industries can expect to see continued interest from private-equity firms. Over the last five years, record levels of private-equity investments have been used to buy power plants, as well as other utility assets and energy product manufacturing facilities. These once-overlooked industries suddenly are hotspots for private-equity investment.

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.