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Fortnightly Magazine - January 2010

Green Quagmire

The black art of pricing social costs.

At the Power-Gen International trade show in December, Questar Chairman & CEO Keith Rattie delivered a firebrand speech opposing the prospect of CO2 cap-and-trade legislation. To summarize, he said the Waxman-Markey climate bill is an “asinine” piece of legislation—which it is, as anyone who reads it quickly discovers. But more broadly, he said concerns about greenhouse gases (GHG) are based on incomplete science and politically motivated alarmism.

Byline: 

Michael T. Burr, Editor-in-Chief

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People (January 2010)

Xcel Energy announced that David L. Eves is the new president and CEO of Public Service Co. of Colorado (PSCo), a subsidiary. Riley Hill succeeded Eves as president and CEO of SPS. Reliant Energy appointed Tom Gros as senior v.p. of sales. CH Energy Group promoted James P. Laurito to executive v.p. of the holding company and its subsidiary, Central Hudson Gas & Electric. Oncor Electric Delivery promoted Charles Jenkins to COO. And more...
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Middle Mile Moxie

Xcel Energy proposes to create America’s first fully functional intelligent grid, with communications and automation systems linking the network from end to end, power plants to meters. Although Xcel still is deploying the system, it’s shown that the early payoff from smart-grid investments won’t necessarily come from automated metering, but from automation in the distribution network—the “middle mile.” As chief architect of the Smart Grid City project in Boulder, Colo., Ray Gogel served on the front lines in the industry’s technology revolution.

Byline: 

Michael T. Burr

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New York Negawatts

Balancing risks and opportunities in efficiency investments.

In June 2008, the New York Public Service Commission (PSC) established the electric energy-efficiency portfolio standards for New York’s investor-owned utilities. In its order, the PSC directed utilities to file three-year energy-efficiency plans. Later that year, the PSC issued a supplemental order approving shareholder incentives for utilities successfully implementing their portfolios. If all goes according to plan, the six affected IOUs stand to earn about $27 million annually in performance incentives over three years. The structure of the incentive mechanism approved by the PSC presents risk factors that might affect utilities’ ability to realize the full earning potentials the mechanism offers.

Byline: 

Hossein Haeri, Jim Stewart and Aaron Jenniges

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Wellinghoff's War

FERC fights for the green-grid superhighway—even if Congress won’t.

The Senate’s deadlock over carbon cap-and-trade legislation has not deterred FERC Chairman Jon Wellinghoff from an agenda bent on promoting renewable energy and fighting climate change. Last fall, even as Congress dithered, FERC launched a landmark initiative that likely will lead to sweeping new rules for expanding the nation’s electric transmission grid, grounded on Wellinghoff’s belief in wind, solar, and green power resources.

Byline: 

Bruce W. Radford

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LMP Works!

Locational marginal prices in PJM respond to demand and fuel costs.

The evolution of real-time locational marginal prices (LMP) in PJM Interconnection’s wholesale electricity markets demonstrates the characteristics of a well functioning and competitive market; prices are driven by supply and demand fundamentals. Although critics of wholesale electricity markets frequently have pointed to increases in LMP as proof that the wholesale markets aren’t working, in reality, the markets are working as they should. Increases in LMP are driven by higher demand for electricity or increasing fuel prices.

Byline: 

Andrew L. Ott

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Not So Fast

Proving market performance requires detailed analysis.

Now that fuel prices have fallen recently from the highs seen in 2008 and wholesale electricity prices also have decreased, it might be tempting to attribute the lower prices to the restructuring of the wholesale electricity markets. Unfortunately, it’s a little more complicated than that.

Byline: 

Kenneth Rose

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Rethinking Prices

The changing architecture of demand response in America.

Pilot projects are demonstrating the potential of smart metering and smart rates to make the most of supply and demand resources. But as empirical studies show, not all pricing designs are equally suited to every region.

Byline: 

Ahmad Faruqui, Ryan Hledik and Sanem Sergici

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Green Energy Outlook

Realizing the benefits of a modernized system requires an integrated strategy.

The U.S. power market consistently has displayed cyclical characteristics of boom and bust over the last two decades. Today’s market environment has been directly and significantly impacted by the recent economic recession. Decreases in load growth, declining commodity prices, and lack of accessible financing have caused challenges for the industry.

Byline: 

Todd Filsinger

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