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Fortnightly Magazine - October 2007

Solve the Seams

The big challenge facing the Northeast energy markets.

The Northeast energy markets are working hard to establish new levels of regional coordination and cooperation. The region’s concerted effort is essential to resolving some of the industry’s toughest issues since the individual markets evolved. These issues include the elimination, reduction, or bridging of seams issues that prevent the economic transfer of capacity and energy between neighboring wholesale electricity markets, or control areas, as a result of incompatible market rules or designs.

Byline: 

Gary L. Hunt

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The Color of Money

Wall Street sees “green” in demand response, energy efficiency, and distributed generation. Will the industry step up?

We recently conducted research to evaluate whether innovative solutions for meeting future energy needs such as demand response (DR), energy efficiency (EE), and alternative distributed generation (DG) (e.g., photovoltaic cells, wind, energy storage) could become a sustainable and viable part of the future energy infrastructure.

Byline: 

Tom Brunetto

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When the Price Is Right

How to measure hedging effectiveness and regulatory policy.

Hedging programs promise protection against energy-market price spikes, and they can be important to the regulatory goal of sustainable, lowest long-term service cost. But how much price protection is enough in natural-gas markets? What is the most efficient use of risk capital when hedging energy supplies?

Byline: 

Stephen Maloney

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Messing With Texas

Armed with calls for gas price transparency, FERC takes aim at intrastate pipelines—the long-forgotten and largely private preserve of the Lone Star State.

Federal Energy Regulatory Commission (FERC) has proposed to bring a modicum of federal oversight to the nation’s intrastate natural-gas pipelines. Given the historical structure and regulation of the nation’s natural-gas industry, it should come as no surprise that FERC’s proposal has polarized the industry in general and the state of Texas in particular.

Byline: 

Bruce W. Radford

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2007 Finance Roundtable: Pricing Regulatory Risk

Despite a favorable outlook for utility finance, cost pressures are straining rate structures.

Utilities are bringing monumental capital-expenditure plans before rate regulators just as they’re dealing with a barrage of rising costs—for fuel and other commodities, as well as labor, pension-fund obligations, and interest payments. Ten energy-finance luminaries elaborate on the industry’s fortunes.

Byline: 

Michael T. Burr

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Banking on the Big Build

The need for many hundreds of billions of dollars in capital expenditures creates huge opportunities and challenges, especially in a more challenging credit environment.

An estimated $900 billion of direct infrastructure investment will be required by electric utilities over the next 15 years, and $750 million already is in place. Nukes, renewables, low-carbon technologies, combined-cycle gas turbines—all have faced cost challenges. The magnitude of the numbers requires a multi-pronged approach.

Byline: 

Roger Wood

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Before You Build It: Think Green

The complex financial analysis that has driven renewable energy investment has become the standard for assessing all potential electric generation investments.

Tax incentives, renewable portfolio standards, and the creation of renewable-energy credits and carbon constraints are no longer separate considerations when assessing renewable-energy projects. The convergence of these economic considerations will affect the value proposition for every potential generation investment in the United States.

Byline: 

Elias Hinckley

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The Power to Reduce CO2 Emissions: The Full Portfolio

What the U.S. electricity sector must do to significantly reduce CO2 emissions in coming decades.

The large-scale CO2 reductions envisioned to stabilize, and ultimately reverse, global atmospheric CO2 concentrations present major technical, economic, regulatory and policy challenges. Reconciling these challenges with continued growth in energy demand highlights the need for a diverse, economy-wide approach.

Byline: 

Revis James, Richard Richels, Geoff Blanford, and Steve Gehl

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Recession Reprieve

An economic slowdown might buy time for regulatory change.

Last month’s “Frontlines” column invoked the dreaded “R” word: “recession.” In what turned out to be Executive Editor Richard Stavros’s final column in this space (Richard left the Fortnightly in September to join Dominion Resources in Richmond, Va.), he suggested the industry’s fortunes might actually benefit from an economic downturn, as Wall Street money flees toward defensive investments.

Byline: 

Michael T. Burr, Editor-in-Chief

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People

(October 2007) J. William Ichord joined Sempra Energy as vice president of government relations. DPL Inc. appointed Frank F. Gallaher to the boards of directors of DPL and The Dayton Power and Light Co. The board of directors of NiSource Inc. elected Deborah S. Coleman, executive vice president and COO of the National Urban League, to the NiSource board of directors. And others...

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