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Fortnightly Magazine - April 2006

A Primer on Hedge Funds

“Hedge funds … are unregistered private investment partnerships, funds, or pools that may invest and trade in many different markets, strategies, and instruments (including securities, non-securities, and derivatives) and are NOT subject to the same regulatory requirements as mutual funds, including mutual fund requirements to provide certain periodic and standardized pricing and valuation information to investors. There are substantial risks in investing in Hedge Funds.”1

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Special Section On Metering: Thinking Smart

Legislation and technology developments give a jump-start to smart metering

What a difference a year makes. In 2004, automated metering infrastructure (AMI) was in something of a slump, but the Energy Policy Act of 2005, an uptick in natural disasters, and encouraging results from pilot projects have strengthened the business case for investing in AMI.

What a difference a year makes.

In 2004, the automated metering industry was in something of a slump. After the 2003 Northeast blackout, and facing rising gas prices and diminished investor confidence during a time of war, many utilities put automated meter reading (AMR) on the back burner.

Byline: 
By Michael T. Burr
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Special Section On Metering: Needed in New England: Stronger Market Connections, Savvier Electricity Usage

The region’s retail and wholesale electricity markets should be linked via dynamic pricing.

The time has come to start the transition from the current economic demand-response programs to demand response that arises naturally through market-based retail pricing.

Over the past few decades, utility sponsored conservation and load-management programs have helped thousands of customers better manage their energy costs. While these programs have helped lower overall electricity use, they generally have not provided an economic incentive for customers to reduce their consumption at specific times in response to wholesale electricity prices.

Byline: 
By Henry Yoshimura, Amr Ibrahim, And Robert Laurita
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A Hard Look at BPL: Utilities Speak Out

After closer study of the technology’s ongoing implementation and obstacles, the crystal ball remains cloudy.

What will it take for broadband over power line (BPL) technology to take hold? Is BPL on track to become, as the National Association of Regulatory Utility Commissioners (NARUC) once contemplated, the “third broadband pipe into residential consumers’ homes, providing significant competition for cable and DSL service,” and an integral part of the 21st century “smart grid”?

Byline: 
By Christian Hamaker
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Deregulation for Real

High power bills, with the lifting of rate freezes, give pause to politicians.

The Baltimore Sun recently carried a very poignant letter from one of its local readers— a letter that utility executives might well take to heart. Appearing under the title, “Energy Advice Cruel to Poorer Readers,” the letter took offense at an article that trivialized the effect of the huge increase in local electric bills (35 to 72 percent) expected this July with the lifting of a long-standing retail rate freeze.

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By Richard Stavros, Executive Editor
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People

New Opportunities: Southern Nuclear Operating Co. announced that its board of directors elected Joseph (Buzz) Miller as senior vice president of nuclear development. Miller is currently the vice president of government relations for Southern Co.

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Letters to the Editor

To the Editor:

In “Rate-Base Cleansings: Rolling Over Ratepayers” (November 2005, p.58), Michael Majoros urges state public utility commissions to recognize a refundable regulatory liability for past charges to ratepayers for non-legal asset retirement costs.

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Getting IRP Right

Quantifying uncertainty in the planning process.

During the 1980s and early 1990s, integrated resource planning (IRP) was a required practice for many utilities. Then competitive wholesale markets, merchant generation, and restructuring initiatives led many utilities to abandon IRP.

While wholesale competition generally has been successful, the regulatory process changes it brought were less so. And utilities now are getting back into long-term resource planning studies to provide decision support for their “back to basics” business strategies.

Byline: 
By Mark Griffith and Fereidoon P. Sioshansi
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What's Holding Back the Nuclear Renaissance?

A compelling spokesperson, and a plan for Yucca Mountain.

The stars would seem to be aligned for a renaissance of nuclear power in the United States. Fossil-fuel prices are historically high, political uncertainty plagues the Middle East, Russia, and other oil-producing regions, new reactor technology looks promising, and President Bush is promoting nuclear among the alternatives for electric power. Indeed, opinion polls suggest the public has an increasingly positive attitude towards nuclear power.

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By Craven Crowell
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Wall Street's Egalitarian View

Investors are making little distinction between regulated or unregulated business strategies. One banker suggests it will be difficult to stand out.

It seems history does repeat itself all too often. In the late1990s, a common complaint by utility CEOs was that utility price-to-earnings (P/E) multiples did not take into account whether a com- pany was a pure-play regulated utility, a diversified utility with a merchant subsidiary, or something else. Many say investors at the time just didn’t understand the different business models that were emerging after electric restructuring.

Byline: 
By Richard Stavros
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