Energy Policy Act of 2005

Building the iUtility

Market forces are transforming the IOU business model.

As market forces transform the IOU business model, Apple’s iPhone provides a metaphor and possible example for the industry to follow. The iUtility will emerge as companies renegotiate the regulatory compact and reinterpret the traditional rate formula.

Nuclear Revolution

How to ease the coming upheaval in the nuclear power industry.

The U.S. nuclear power industry faces a yawning talent gap. Half of the industry’s employees are over 47 years old, and more than a quarter of nuclear workers already are eligible to stop working. Meanwhile, as the baby boomers retire, there will be far fewer available replacements with nuclear knowledge.

Energy Risk & Markets

Allowance trading needs oversight, but don’t overdo it.

As Congress mulls omnibus climate-change legislation, questions are arising about the potential for greenhouse gas emissions markets to be manipulated. Current legislation attempts to address the problem, but only a streamlined oversight regime can hope to prevent emissions-trading abuses.

Demonstrating the Smart Grid

Pilot projects clarify the vision of an intelligent utility system.

Pilot projects are bringing the future vision of the grid to life. Whether leveraging existing systems or rebuilding entire networks in a Big Bang rollout, new technology applications suggest an intuitive electrical network may not be far off.

Prime Time for Efficiency

New England shows the benefits of demand resources in forward capacity markets.

New England is leading the way toward a future that is both cleaner and provides greater electric reliability at reduced cost. New England Independent System Operator (ISO-NE) has created an innovative mechanism that addresses concerns about ensuring adequate energy capacity by allowing the cleanest and lowest-cost resources to be used to meet the nation’s power needs.

Private Equity Still Strong

Volatile markets create investment openings.

(June 2008) As fossil fuel prices continue increasing and alternative energy gathers momentum, the energy and utility industries can expect to see continued interest from private-equity firms. Over the last five years, record levels of private-equity investments have been used to buy power plants, as well as other utility assets and energy product manufacturing facilities. These once-overlooked industries suddenly are hotspots for private-equity investment.

Selling the Smart Grid - The Policy

Why many state regulators still have qualms about endorsing smart meters.

A year ago, in its formal investigation of state policy on smart meters, the Florida Public Service Commission conceded that while three of the state’s five major investor-owned electric utilities offered an optional time-of-use rate to residential customers, participation in fact remained “typically quite small,” averaging only about 1 percent.

Transforming the SysOp

Strategic pain points require an artful approach.

Utilities are at the threshold of some of the most significant changes they have faced in their history, rivaling the passage of PUHCA in 1935. This change emanates primarily from a handful of key business drivers associated with major technological improvements (i.e., AMI, smart grid), the need for increased customer focus, increased regulatory mandates, and a changing workforce.

Capacity Markets Demystified

Emerging capacity auctions offer limited but valuable risk-management tools for asset owners.

Fast forward to today’s partially deregulated electric power markets. Wholesale electric energy often is traded in various central markets, as well as among individuals in bilateral transactions. Wholesale electric energy prices largely are deregulated, and clearly, over the past decade, market participants have become adept at routinely charging much more than their variable production costs. This “rent extraction,” as economists commonly call it, can take various forms, and while the mechanism for achieving it can be complicated, the evidence is quite clear that today’s wholesale electricity prices typically are higher than the variable costs of most or even all suppliers.

PURPA Redirected

The latest ‘incremental’ policy changes might realign utility financial incentives.

Back in 1978, Congress passed an energy bill, the National Energy Act, including an obscure provision that seemed like an incremental tweak to U.S. energy policy. But eventually, that incremental tweak—the Public Utility Regulatory Policies Act (PURPA)—smashed through the gates of the vertically integrated utility construct. PURPA introduced competition into wholesale power markets in a way that fundamentally changed the U.S. utility industry.