Fifteen years ago, you couldn’t fill a small room with energy CEOs interested in discussing how credit risk affects their companies’ bottom lines. But a recent series of contract defaults, bankruptcies, Sarbanes-Oxley controls, and merger-and-acquisition activity has placed credit-risk management squarely on the industry’s radar. Today, it’s clear that an integrated risk system that measures, monitors, and manages credit-related risk is no longer a Wall Street extravagance, but rather an industry essential.

Miscellaneous distribution operations expenses totaled $878 million in 2004— the largest single element of the distribution operations expenditures. Greater integration of real-time data can bring such costs under control.

Alignment of the business and the information technology (IT) functions within a company is critical to the effectiveness of any strategic initiative. Three years ago, our research identified a number of best practices in IT integration, as they affected M&A execution. What changed, according to our new survey, is the way senior IT executives and senior business managers define success in a merger transaction. With so much at stake in any merger, the distinctions between these two important management constituencies are critical.

With a heightened focus on risk management, it has become increasingly clear that traditional risk-management approaches do not adequately identify, evaluate and manage risk. An ERM approach integrates risk management with existing management processes, identifies future events that can have both positive and negative effects, and evaluates the effectiveness of strategies for managing the organization's exposure to those possible future events. ERM transforms risk management to a proactive, continuous, value-based, broadly focused, and process-driven activity.

In the electric power industry, the urge to merge has gained a new lease on life. These combinations are witness to the powerful forces of consolidation let loose when deregulation makes consolidation a preferred tactic in an uncertain world. But to what extent will government policy encourage or resist this trend? What exactly is the regulatory environment that nurtures combinations or, for that matter, supports fragmentation? As we shall see, there are many cross-currents.

Technology Corridor

Outdated "wisdom" wastes the nation's electricity infrastructure. Distributed CH&P is the answer.

 

The use of wasted heat-which now comprises two-thirds of the energy value of the fuels used in generat-ing electricity in this country-may be the most important benefit from using more distributed generation.

Virtual reality comes of age in the power industry.

Technological breakthroughs in power generation, pollution control, waste management, renewable resource applications, and many similar areas are at the forefront of advances in developing, managing, and delivering public utility products. However, technology that is more often associated with computer games and Hollywood blockbusters is taking hold in the industry, and its impact may well be as great as any of the more well known technologies.

Virtual reality comes of age in the power industry.

Technological breakthroughs in power generation, pollution control, waste management, renewable resource applications, and many similar areas are at the forefront of advances in developing, managing, and delivering public utility products. However, technology that is more often associated with computer games and Hollywood blockbusters is taking hold in the industry, and its impact may well be as great as any of the more well known technologies.

The next big trend is to make network resources more interchangeable and less expensive.

Information technology (IT) infrastructure should be more like the infrastructure that generates electricity, IT consultants say, and at least one Texas utility is listening.

Forrester Research labels its vision for IT infrastructure "Organic IT" and promises that this new kind of infrastructure will save companies big bucks in the long run, without requiring a rip and replace of existing hardware and software.