Commission

Building a Utility Roll-up Machine

How private-equity firms may consolidate the utilities industry.

Financial acquirers of utilities face a higher hurdle than traditional acquirers because their reputation for seeking out-sized returns on highly leveraged, short-term investments doesn’t play well. Shaking off that reputation will lead to more effective consolidation.

Pulling An Inside Job

PJM loses luster in a squabble over market monitoring.

The bottom fell out in the hearing room at FERC on April 5 when witness Joseph Bowring let it slip that, yes, he might well prefer more independence from his employer in his role as chief of the market monitoring unit at the PJM Interconnection.

Winds of Change Freshen Resource Adequacy

Intermittent and interruptible resources increasingly are being considered in regional resource adequacy calculations—but the approaches differ.

While both NERC and the NERC regional councils (known today as the Electric Reliability Organization) have standards and guidelines for resource adequacy and system reliability, much of the specificity as to how interruptible (e.g., demand-side) and intermittent resources (e.g., wind) are included is left up to the individual ISO/RTOs, states, provinces, etc. In fact, the various regions across North America each seem to have their own methodology for incorporating these resources into their resource adequacy and reserve-margin calculations. As the North American energy industry escalates its desire to reduce greenhouse-gas emissions through the expanded use of demand-side resources and intermittent renewables, the importance of this topic also will escalate.

People

(May 2007) The board of directors of Maine & Maritimes Corp. selected Brent M. Boyles to become the organization’s next president and CEO. Consumers Energy has named Bruce Rasher manager of renewable energy. FPL Group Inc. announced that Oliver D. Kingsley Jr. has been elected to the company’s board of directors. Pacific Gas and Electric Co. named Des Bell as utility chief of staff and vice president.

Double Dealing on Carbon

Will the environmental lobby be even-handed with utilities?

They were heralded as “landmark” or “watershed” moments in the industry—a series of deals completed during the last few months in which utilities sat down and negotiated with environmentalists on coal-plant development. While many in the industry had hoped this was the start of a positive new trend, some environmentalists have double-dealt across state lines, arguing against coal plants in one state and then negotiating for their development in the other.

Penalty Shot

An interpretation of FERC’s first application of EPACT.

At its open meeting on Jan. 18, 2007, FERC unanimously approved settlements with five electric utilities for a total of $22.5 million and other considerations. This action answers some important questions that energy market participants have been asking. In particular, it helps market participants connect some important dots regarding the regulatory landscape in which they must operate, but it also raises important questions that market participants would like answered.

Natural-Gas Revenue Decoupling: Good for the Utility, or for Consumers?

Among a host of arguments for and against RD is the question of upside for consumers.

Retaining adequate earnings is the driving motive for revenue decoupling (RD) among gas utilities, while conservationists view RD as necessary for the removal of resistance to energy efficiency. But the benefits of RD to consumers are less certain.

Greening the Grid

Can markets co-exist with renewable mandates?

Part way through the Feb. 27 conference on electric competition, it was so quiet you could hear a hockey puck slide across the ice. No, hell had not frozen over. Rather, it was Commissioner Marc Spitzer, who had found a clever story to ease the tension and allay fears that FERC somehow might want to undo the sins of the past, and give up its dream of workable markets for wholesale power.