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Fortnightly Magazine - December 2002

Big City Bias: he Problem with Simple Rate Comparisons

Looking beyond ranking utilities on price.

Looking beyond ranking utilities on price.

It's tempting to compare rates between utilities- to use those simple rankings as regulatory carrots and sticks-but those who do may play a dangerous game. While such rankings may appear compelling, they can add an inappropriate bias to the regulatory process and penalize well-performing electric utilities that operate in high-cost service territories, such as large metropolitan areas.

Byline: 
Johannes P. Pfeifenberger and Mark W. Jenkins
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Back to the Drawing Board

Executive and academic views on what to fix and what's not broke.

The sound and fury over trading scandals, credit defaults, and market manipulation so far has drowned out much of the mind-numbing debate over a standard market design (SMD), and rightly so. Utilities understand (as does the press) that Enron, "Deathstar," and "Get Shorty" will always sell more newspapers than locational pricing or congestion management.

Byline: 

Richard Stavros

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Optimizing Expenditures.

Asset Optimization Explained

To the editor:

In the Oct. 1, 2002 issue ("The Fourth Wave," Frontlines, p. 4), executive editor Richard Stavros discusses how the term "asset optimization" has been used ambiguously to describe a tactical means of extracting more value from generating assets.

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Squeezing Juice from Plants

Asset optimization is a favored utility strategy in an economic downturn.

Asset optimization is a favored utility strategy in an economic downturn.

Generation plant construction has gone down with the economy. "Our project finance pipeline is as dry as I have seen it," says energy analyst Jerry Pfeffer of Skadden, Arps, Slate, Meagher & Flom, speaking at a recent energy conference in New Orleans. He predicts it will take at least a year or two until new construction starts up again in any significant manner.

Byline: 
Lori A. Burkhart
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Generation Assets: How to Derive Greater Value

Learning from Wal-Mart.

Learning from Wal-Mart.

It's bad enough that merchant generating companies are struggling under the weight of regulatory, accounting, and public scrutiny in an era of shattered shareholder confidence. To make things worse, over the past few years generation was overbuilt on speculation that sparks spreads would be maintained and the economy would grow. But sparks spreads have shrunk, and given the national economic downturn, energy use is also down.

Byline: 
Christopher A. Grier
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Capping Emissions: How Low Should We Go?

Investigating where environmental efficiency and good public policy intersect.

Investigating where environmental efficiency and good public policy intersect.

More than a decade after adopting the first national cap-and-trade approach to regulating pollution from electricity generators, Congress is considering another round of cap-and-trade regulations on a number of gases emitted by electricity generators.

Byline: 
Karen Palmer, Spencer Banzhaf, and Dallas Burtraw
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