Inclining Toward Efficiency

Is electricity price-elastic enough for rate designs to matter?

Contrary to conventional wisdom, electricity demand isn’t immune to price elasticity, and rate designs can encourage conservation. In particular, inclining block rates coupled with dynamic pricing can cut electric use by as much as 20 percent.

Revisiting the Keystone State

Rate caps have squelched competition in Pennsylvania.

The prolonged period of capped rates in Pennsylvania—years longer than in any other state—has produced some benefits and some drawbacks. On the plus side, due largely to the rate caps, electricity costs in the Commonwealth have fallen from 15 percent above the national average in 1996 to below the national average in 2007. This has been a significant benefit, but a temporary one that many have taken for granted.

Energy Technology: Cultivating Clean Tech

New Models for Energy RD&D: A new ‘Clean Energy Institute’ could lead the industry’s war on climate change.

Clean-energy R&D needs better funding and leadership to meet aggressive greenhouse-gas emissions reduction targets. But how does the industry get there, and what management model best suits achieving such lofty goals? A new ‘clean-energy institute’ might be the answer.

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.

The Big Build

Utility infrastructure projects face high costs, labor shortages and global competition for resources.

A huge backlog exists for utility infrastructure projects. Major players in the construction industry—ABB, Black & Veatch, Siemens, The Shaw Group and WorleyParsons—discuss the trends, both good and bad, and how they are getting the job done on badly needed projects.

Nuclear Fuel Future

Nuclear power cost projections should incorporate fuel cost uncertainties.

Nuclear fuel cost projections typically consist of current reported costs that are escalated at the rate of inflation. These projections usually consist of a single estimate in each year. In the past, when nuclear fuel costs were low and declining, this approach was acceptable and may have even been conservative. But this approach is likely to understate projected nuclear fuel cost when nuclear fuel costs are increasing.

Financing New Nukes

Federal loan guarantees raise hopes for new reactors planned by affiliates of Constellation and NRG.

Federal loan guarantees have been unleashed to support new nuclear plant construction. Will this be the watershed event that finally gets nuclear moving forward in the United States?

GHG Compliance Complexities

Greenhouse-gas regulation will impose vastly greater compliance difficulties than did the Acid Rain program.

Greenhouse gas (GHG) regulation picks up where Acid Rain legislation left off, but affects far more sources and pollutants. Utility compliance programs face major uncertainties.

Sticker Shock!

Increasing prices for materials, equipment and services are driving utility infrastructure costs into uncharted territory.

The evidence is overwhelming: After a decade of relatively stable, or even declining, construction costs, the industry is now facing a prolonged period of elevated construction price tags. What are the causes behind this trend, and how might the cost increases translate into higher rates?

The Wonderful Curse

Production constraints and demand pressures mean high gas prices are here to stay.

Volatility in energy prices is both a scary and wonderful thing. It brings risks that must be managed under uncertain future conditions. It also brings opportunities to profit from price movement and competitive market advantages exploited through strategy, skill and luck. Just how good the outcome of such volatility can be depends on how well each market participant studies the fundamentals, manages uncertainty and remains flexible.