Cost

Bringing Customers On Board

Realizing the benefits of smart meters.

Information is power, and through smart technologies utility customers will gain access to that information. The challenge faced by utilities is to harness consumer benefits by boosting customer acceptance and participation in programs designed to lower system expenses.

Smart Grid: Wholesale Market Realities

Granular customer data will revolutionize megawatt markets.

Advanced metering and other smart technologies will allow more granular monitoring of conservation efforts, making them highly predictable for resource planning and system dispatch. Eventually, the smart grid will erase distinctions between wholesale and retail markets.

RTOs and the Public Interest

Defining the mission when the consumer plays second-fiddle to the needs of the market.

Six months back, when ISO New England was mulling over various reforms that FERC had mandated last fall in Order 719 for the nation’s six regional transmission organizations and independent system operators (RTOs and ISOs are interchangeable terms in this column), the ISO refused point blank to include in its mission statement a proposal by stakeholders that it should operate the bulk power system at the “lowest reasonable cost.”

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.

The New Normal

Our economic future depends on adaptability.

For the past several months, analysts and pundits have been using the term “the new normal” to describe post-recession economic conditions. The phrase describes a variety of changes, from stock-market returns to personal savings rates, but it boils down to this: After the recession, the economy will go through a soft recovery, and it won’t return to pre-recession levels of financial and market activity in the mid-term future.

Assessing Construction Compliance

Gas utilities can make better use of their inspection budgets.

An entirely new and better approach to measuring risk and compliance allows companies actually to measure this kind of risk—that is, to measure the degrees of compliance regarding actual field practices versus written standards and procedures.

Ontario's Failed Experiment (Part 2)

Service quality suffers under PBR framework.

Building upon last month’s installment, more is revealed on how, after 10 years of incentive regulation, reliability has declined in Ontario.

An Indicator of Fairness

Ratable treatment of removal costs through depreciation should be favored.

Removal cost is the expenditure involved with physical removal or safe abandonment of an asset, and is not a trivial matter, because it is not unusual for such expenditures for long-lived property to exceed the related depreciable investment amounts. Various treatments of removal costs have various effects on utility ratepayers. Of all the approaches the industry uses, ratable treatment through depreciation minimizes the costs borne by ratepayers.

Ontario's Failed Experiment (Part 1)

Reliability declines after 10 years of incentive regulation.

After 10 years of incentive regulation, reliability has declined in Ontario. Regulators failed to enforce service-quality standards, and consumers are suffering as a result.

Security vs. States' Rights

Will Congress dare to put local wires under federal control?

Congress hasn’t amended the Federal Power Act in any way that would change the status quo, and a bright line still separates the distribution business from the federally regulated bulk-power system. Pending legislation, however, might change that.