New approaches to contracting in a post-turnkey world.
Sponsors of new nuclear power projects face a gauntlet of development challenges, from fickle regulatory policies to supply chain uncertainties. By preemptively addressing risks and taking a systematic, hands-on approach to development, companies can improve chances for a nuclear renaissance in America.
(December 2007) John Ferguson responds to “Creating the Perfect Regulator”: "Burr identifies four fundamental goodness traits: omniscience, Solomonic wisdom, clairvoyance and righteousness. Inherent in these traits, but not specifically addressed by Burr, is the ability to recognize and reject advice from those interested in telling the regulator what the advisors think the regulator wants to hear instead of what the regulator should hear."
State-policy turmoil reshapes utility markets.
As many states move toward re-regulation, we speak to commissioners in Illinois, Missouri, Pennsylvania, Texas, and Virginia to learn how policies are evolving—and how far the regulatory shakeup will go
The need for many hundreds of billions of dollars in capital expenditures creates huge opportunities and challenges, especially in a more challenging credit environment.
An estimated $900 billion of direct infrastructure investment will be required by electric utilities over the next 15 years, and $750 million already is in place. Nukes, renewables, low-carbon technologies, combined-cycle gas turbines—all have faced cost challenges. The magnitude of the numbers requires a multi-pronged approach.
Electric shortages and the generation overbuild continue to co-exist.
While maintaining its stance as the most sophisticated competitive electricity market in the country, PJM still faces several challenges, all of which are augmented by its expanded footprint. Most prominent is the RTO’s plan to implement a new reliability pricing model. Further, parts of PJM are ailing from transmission congestion issues that limit access to abundant, cheap power sources in the region.
In “Rate-Base Cleansings: Rolling Over Ratepayers” (November 2005, p.58), Michael Majoros urges state public utility commissions to recognize a refundable regulatory liability for past charges to ratepayers for non-legal asset retirement costs.
Incentives for transmission investment could boost postage-stamp pricing over license-plate rates.
FERC proposed a new set of regulations, under the new section 219 of the Federal Power Act, explaining in broad outline how it might approve generous financial incentives for new investments in transmission—incentives once dubbed as “candy.” As of mid-January, the new NOPR had spawned more industry comment than just about any other FERC proposal in recent memory.
FERC must align the immediate self-interest of profit-maximizing entities with its own view of what is in the public interest.
Two obstacles must be overcome to achieve true competitive markets: reversal of the long-term underinvestment in transmission, and greater clarity in the legal and regulatory environments. How can the industry make the most of a somewhat defensive regulatory posture?
Imagine That!
A Stock-price Premium for DSMA rise in DSM spending (as a percentage of total expenditures) indicated
an increase in market-to-book ratio.
For electric utilities, financial and managerial attributes such as rate of return or the dividend payout ratio often exert a strong positive effect on the market-to-book (M/B) ratio (em the ratio of the company's stock price divided by book value.
One of the iron rules of competition and open markets is that there are winners and losers. Winners tend to win very big; losers tend to lose everything and disappear, through absorption or insolvency. As deregulation takes hold, high-cost producers and less adroit managers may find themselves steamrollered by emerging strongmen and entrepreneurial upstarts. These rivals may usurp segments of their business by bidding the job cheaper and still making money, leaving a rising tide of shareholder suits in their wake.