The opposing challenges of higher gas prices and rising environmental concerns have put utility regulators in a difficult position: How can they bring rate stability while minimizing environmental impacts? At the same time, they are grappling with trends in consolidation, competition, transmission planning, and distribution service quality. Each state brings a different view of the changing utility landscape. For insight, Fortnightly brought together regulators from several states to discuss their plans and priorities for today and the future.

A major objective of the Energy Policy Act of 2005 (EPACT) is to counter the worsened conditions in the natural-gas market that began in 2000 and are expected to continue over the next several years—namely, tight natural-gas supplies and high, volatile gas prices caused by a distinct shift in the supply-demand balance. Any noticeable reductions in gas prices that might be effectuated by the act will have little impact on natural-gas prices for a number of years.

The Geopolitical Risks of LNG

To many energy-industry analysts, 2005 is a make-or-break year for the U.S. gas market. If we don't have at least several liquefied natural gas (LNG) terminals in construction by the end of the year, the country arguably will face serious gas-supply shortages and price spikes beginning in about 2008.¹

At times, various conditions align and set the stage for achieving goals that may have appeared to be unreachable. Last summer, the Boston Red Sox were all but eliminated from contention, but then won an amazing stretch of baseball games that resulted in a World Series championship.

A similar scenario can be applied to the U.S. nuclear industry-producer of a steady, low-cost, environmentally important electricity source poised to thrive with the possibility of new plant construction in the not-so-distant future.

Ratemaking Special Report

Regulatory Uncertainty:

In a joint survey conducted by Navigant Consulting and , utility executives identify the biggest challenge to their business.

No matter what position you subscribe to when characterizing the degree of competition in today's energy industry, it is clear that regulation continues to serve as a major influence on the business strategies and operations of the gas and electric distribution utilities in North America.

GAS SUPPLY

Pipeline and LNG terminal developments may arrive too late to prevent a natural gas disaster.

For exactly two months, MidAmerican Energy sponsored a $6.3 billion project to bring stranded natural gas from Alaska's North Slope to an adjoining pipeline in Canada. But when Alaska's Department of Revenue rejected MidAmerican's proposal for an exclusive partnership to develop the pipeline, the company pulled out.

Despite development challenges, LNG capacity is destined to play a bigger role in the U.S. energy mix.

When MidAmerican Energy announced its plans to build a pipeline to bring stranded Alaskan natural gas into the lower-48 states, the U.S. energy industry stood up and took notice. If successful, the project will bring the largest infusion of gas that this country has seen in many years-and not a moment too soon.

Business & Money

Experts debate whether KKR's leveraged buyout of UniSource Energy is right for the industry.

"From a public policy standpoint, should a utility that provides a vital public good be owned by a private group that gains ownership by taking on a high degree of debt (risk)?"

People

New Opportunities:

Duke Energy made several changes to its executive leadership. Dick Blackburn said he would retire as the company's executive vice president, general counsel, and chief administrative officer. He had been with the company since 1997. Duke also named Bill Easter chairman, president, and CEO of Duke Energy Field Services, replacing Jim Mogg, who moves up to group vice president and chief development officer for Duke Energy.