Cost

Frontlines

Is the predicted crisis this winter a failure of policy, the market, or both?

Given the free market in natural gas, why haven't prices attracted the needed infrastructure or supply? (LNG imports are actually down from last year.) What policies could have been contemplated ahead of national legislation? Or put more simply, why has supply lagged demand?

What Is Your Power Portfolio Really Worth?

Change is the only certainty in today’s market.

The past year has allowed the North American power sector to continue its recovery, but it has been a treacherous time for investing. Asset values, and the value of their associated debt instruments, are being driven in the short term by an extreme fuel market and in the long term by a back-to-basics mindset among electric utilities. Still, asset valuations in most markets are not yet at replacement costs, leaving current investors with a residual level of risk.

The Cost of Katrina

Debate continues on how to safeguard America's energy infrastructure.

In the wake of Hurricane Katrina, the central question: Could any of this have been avoided? Many experts believe that the new authority given to FERC to enforce mandatory reliability standards, as per the Energy Policy Act of 2005, will bring greater transparency to the process of protecting critical infrastructure.

Finding the Utility's Core

Where should outsourcing end—and the real utility begin?

When utilities evaluate business process outsourcing, they need to determine which processes are most advantageous to outsource—core or non-core? Rather than debating the merits of core or non-core, perhaps the more critical questions utilities should ask are: How are our key processes performing? Are they cost-efficient and effective? Do they enhance or inhibit our corporate performance?

Smart Meters on The March

New federal policies portend a wave of demand-response programs, and perhaps a new era in resource planning.

When President Bush signed the energy bill on August 8, he set in motion a chain of events that might lead to major changes in the way utilities price and meter retail electric services—and ultimately in the way they value and use non-traditional energy resources.

Yet Another Subsidy For Wind?

FERC risks going overboard in easing penalties for generation imbalances.

What good is a penalty that does nothing to deter the crime? For wind turbines, generation imbalances are caused primarily by variations in weather. Even if these imbalances are indeed a bad thing, no $100 penalty will make them go away.

Measuring Return on Equity Correctly

Why current estimation models set allowed ROE too low.

A material capital structure mismatch, which occurs frequently, can lead to material misestimates of the appropriate allowed return on equity, perhaps on the order of 2 percentage points. That is, a 9 percent estimate of the cost of equity can imply an allowed rate of return on equity of 11 percent.

Power-Plant Cooling: How Many Fish Per kWh?

EPA flounders on the Clean Water rule, while producers tackle the real enemy—shortage.

The U.S. EPA says that a typical sport fisherman working the Great Lakes would pay $4.58 for the privilege of catching a single walleye/pike, but would gladly fork over $7.99 to land a trout, or as much as $11.19 for a salmon. Sound fishy? Yet the EPA would rely heavily on these data, and other figures quite similar, to justify its proposed “Phase III” rule to regulate cooling water intake structures at small power plants and other similarly sized facilities, to preserve aquatic and marine life in the nation’s lakes, rivers, streams, bays, and estuaries.

RTOs: Facts, Not Fiction

The benefits and future challenges of regional transmission organizations.

Ten years after the initial Notice of Proposed Rulemaking that set in motion the establishment of RTOs, it is hard to dispute that the mature organized markets with independent management of the grid have achieved tangible benefits for all customers. It is important to remind ourselves of the accomplishments and challenges ahead.

PUHCA Debate - Again

The SEC denies approval of the AEP/CSW merger. What will that mean for industry consolidation?

What's wrong the Public Utility Holding Company Act of 1935 (PUHCA)? The 1935 act clearly did not contemplate a competitive marketplace for electricity. Legislation should be updated to reflect the prevailing energy economic climate.