ON MARCH 26, JUST BEFORE IT OPENED THE STATE'S electricity market at midnight on the 31st, the California Public Utilities Commission announced new interim rules to protect consumers, plus this warning: "Any entity who is considering doing anything contrary to [state law] regarding electric restructuring, and [this] decision adopting such safeguards, should think twice."
Ostensibly, that advice followed from last year's passage of State S.B.
EL NIÑO HAS STRUCK, WITH NO END IN SIGHT.
Consider that Aquila Energy, the marketing arm of UtiliCorp United, has announced a new financial derivative, known as GuaranteedForecast,sm to hedge the weather against forecasts by the National Weather Service. The new product will pay holders a guaranteed amount if the mercury strays, and Aquila touts its thermometer hedge for any of 170 U.S. cities (em be it Spokane, El Paso, Chicago or New York. Why talk about the weather when you can invest in it, in true '90s fashion?
For this heating season, however, it may be too late.
THE RAPID DEREGULATION OF THE BULK POWER MARKET has exposed utilities and power generators to the harsh reality of spot price volatility. This new reality begs the question: How can merchant generators, independent power producers and investor-owned utilities analyze their risk exposure when energy prices vary daily or even hourly?
The answer lies with spark spread options (em the link between electric power and gas prices.
WELCOME BACK, MY FRIENDS, TO THE SHOW that never ends."
So said two weary commission staffers, trudging out of the hearing room late Friday afternoon, Jan. 31, as the Federal Energy Regulatory Commission adjourned its technical conference on the financial outlook for natural gas pipelines.
The hearing ran way behind schedule (em further evidence that before she left last summer for the Department of Energy, former FERC Chairwoman Elizabeth Moler neglected to pass along to successor James Hoecker whatever gene she possessed that allowed her to keep meetings moving right along.
FOR ALL THE ATTENTION FOCUSED ON NEW LAWS AND regulations designed to create competition in electric power markets, too few people seem to grasp how a market can work. That will change, however, now that Pennsylvania is the first large state to embrace market pricing.
Pennsylvania's lawmakers and three of its five utility commissioners have developed a market to deliver the benefits of competition to consumers.
THE RESIDENTIAL MARKET STANDS AS THE NEXT FRONTIER for natural gas unbundling. In California, Illinois, Maryland, Massachusetts, New Jersey, New York, Ohio, Pennsylvania and elsewhere, states have introduced pilot programs and other unbundling efforts to target residential gas consumers. %n1%n
These efforts are hardly surprising. The residential market, presently dominated by the regulated local distribution companies, appears lucrative. In 1995, the residential sector of the U.S.
Has rate regulation become obsolete for natural gas pipelines?
Gas utility executives never tire of telling how the regulators won't let them make money any money selling gas.
Interstate Power Co., which distributes both gas and electricity in Illinois, laments that no one understands: "Almost all small volume customers do not realize that their local distribution company does not make any money on the sale of gas¼ even large transportation customers have difficulty dealing with the concept."
So why would any LDC oppose retail gas competition?
MANY STATES ARE CONSIDERING THE IDEA OF opening billing and metering to competition at traditional distribution companies. %n1%n Electric utility executives can no longer assume that a regulated monopoly distribution company, or "disco," will retain control of both the "wires" function and billing and metering services. %n2%n
This new prospect raises questions: Should a disco seek to retain billing and metering as a regulated monopoly, complete with the obligation to serve all customers requesting electric connections?
YEAR 2000. MILLENNIUM. DEREGULATION. Each word strikes fear into the heart of meter manufacturers and utilities alike. Like the turning of the century, deregulation is coming for the electric utility industry, and sooner than we think. How will it affect the metering industry?
The first real indication can be found in California. There, by order of the state public utilities commission, the customer's energy supplier (the energy service provider or the utility distribution company) will, for the time being, own the meter.