Resource planners are faced with complex choices for developing cost-effective and robust energy supply portfolios. These choices are complicated by uncertainties inherent in future fuel and emissions costs. In the summer of 2008, retail energy providers with supply primarily from wind generation had a substantial cost advantage over gas-fired generation. In the summer of 2009, though, gas prices plummeted in the wake of the recession. Reversing the previous trend, this shift causes wind generation to appear more costly relative to gas-fired generation.

At a time when many states and municipalities are facing budget deficits of historic proportions, many power generators are struggling against declining demand, the lowest electricity prices in many years, and looming carbon legislation. As a result, tax authorities might be seeking to raise property tax receipts at the exact same time that many generators are looking to lower their assessments. Conflict appears to be on the horizon, but where will it emerge? An examination of state budgets, as well as the expected changes in generator gross margins, reveals how tax collectors and taxpayers are most likely to respond.

Those who don’t embrace new technologies will get left behind when the world changes around them. This is true across generations and across industries. At the same time, however, the telecom revolution offers a cautionary lesson about what motivates consumers and how it translates into business opportunities.

Ask Ed Bell about energy trading and risk management (ETRM) technology and he’ll likely bring up his days with Enron back in the early 1990s. Bell—now a principal at Houston-based technology consulting firm International Commerce—says there are distinct similarities between the functional trading and risk assessment requirements his team had to plan for back then and the system requirements ETRM platform vendors and their clients have to prepare for today.

Regulatory policies are evolving to make demand response and smart-grid planning a reality across the country. Cooperation between federal and state lawmakers will allow local flexibility within a uniform national framework.

States’ green energy policies are being used to serve multiple agendas. Lawmakers should revisit their renewable incentive programs to better align them with policy goals. A regional approach will yield a more efficient portfolio.

The feds are ready to replace disjointed state policies with a coordinated national renewable energy credit market. Treating low-carbon energy consistently will promote investment in renewables.

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.

(January 2010)