Three challenges to federal authority from those unhappy with the status quo.
A look at how regulators, grid operators, and consumer advocates in Arkansas, California and Connecticut have posed challenges to established law and policy at FERC.
Call options can be used as a financing tool for fixed-cost renewable energy technologies.
An unexploited benefit of renewable energy is the predictability of operating costs over the long term. A renewables operator knows today how much it will cost to produce energy decades in the future. This future price certainty has a value that can be transferred to electricity buyers or other market participants. How much value can a renewable-plant operator capture from selling long-term call options, given several future price and volatility scenarios? What will be the cost and benefit to an individual buyer or seller?
Eleven questions to ask senior managers about their risk-management objectives.
It is almost impossible to design an effective hedge program without first determining the exact objectives a company wants to achieve. Although this sounds obvious, it rarely is. Management usually can agree that the firm should hedge to reduce risk, but “risk” is too vague a term to justify hedging on its own.
Congress gives FERC an impossible task: Craft long-term transmission rights to save native load from paying grid congestion costs.
If “perfect” be the enemy of the “good,” then look no further for proof than in Federal Power Act section 217(b)(4), enacted by Congress in EPACT 2005.
The absence of long-term transmission rights could exclude potential competition—and cause higher electricity costs.
Power-industry restructuring redistributed financial uncertainties that discourage generation investment and ultimately raise the price of electricity to consumers.
The unclear language governing termination rights is subject to interpretation and extraordinary financial risk.
How does one determine the value of power contracts under early termination? Given the vagaries of the contracts themselves, the process is neither clear nor standard, and often results in protracted and costly litigation. Did the counterparty have the right to terminate in the first place?
EPA flounders on the Clean Water rule, while producers tackle the real enemy—shortage.
Special Series Part 5: How to find "commercially reasonable" valuation in power contract terminations.
Contract termination should be easy. Consult the applicable master agreement, calculate the close-out amount, and send or receive a check. If only it were so. In this discussion, we investigate the guidance offered in the key electricity master agreements regarding the calculation of settlement amounts following an event of default and subsequent termination. We also illustrate what we perceive to be a "commercially reasonable" or "good faith" approach to determining settlement amounts.
A short list of questions that every board member and senior manager should be able to answer.
The technology works, but public policy will dictate its future.