Utility executives face volatile energy markets, skyrocketing fuel prices, and changing federal energy policies. How are utilities benefiting from the turnaround in energy trading?

FERC proposed a new set of regulations, under the new section 219 of the Federal Power Act, explaining in broad outline how it might approve generous financial incentives for new investments in transmission—incentives once dubbed as “candy.” As of mid-January, the new NOPR had spawned more industry comment than just about any other FERC proposal in recent memory.

Before we go about trying to value natural-gas storage, we should try and come up with a list of important considerations in any valuation process. Also, the data requirements should be modest, and the calculation time should be reasonable. But not all gas storage valuations are created equal.

To better understand the performance of the electric utility sector from both a short-term and long-term perspective, we examined the total shareholder return (TSR)—dividends plus change in stock price—of 58 electric companies for 2005 and for three- and five-year periods. We grouped these companies into four categories to better understand the impact of alternative strategies on investor performance: Recovering, Traditionalist, Growth, and Merger.

To create the strong electric reliability system envisioned by Congress, FERC needs to focus on many issues, two of which are especially important: creating consistency in how compliance and enforcement programs are carried out at the regional level, and leading the transition—effectively and promptly—from today’s world to the new era called for in EPACT.

If you were a utility executive today would you consider building a new nuclear power plant? What if the United States decided to implement the emission reductions called for in the Kyoto Protocol without adopting it? How might your business be affected by another 9/11-scale terrorist attack on a U.S. target? What would be the impact of growing reliability problems in key U.S. power markets? Some utility executives are asking themselves just such questions.

(March 2006) FirstEnergy Corp. named Bennett L. Gaines vice president and CIO. PPL Corp. named Matt Simmons vice president and controller. NorthWestern Corp., d/b/a NorthWestern Energy, named D. Louis Peoples to its board of directors. The Nuclear Regulatory Commission’s Advisory Committee on Reactor Safeguards re-elected Dr. Graham B. Wallis as chairman, Dr. William J. Shack as vice-chairman, and John D. Sieber as member-at-large. And others...

With the possible exception of keeping the lights on, the merger game dwarfs just about every other question facing today’s electric utilities. The last big wave of consolidation hit in the late 1990s. Now the forecast calls for a repeat performance, but don’t bet the farm. There’s a hitch, you see. It’s today’s high commodity costs.

Jacob Williams, VP Generation Development, Peabody Energy: While transmission built to “compete” with generation capacity is an interesting notion, it generally misses the real value of transmission. In today’s high energy-price world, delivering “affordable” energy to consumers is very important. I believe we need higher standards in the electricity market similar to transportation, where we value reliability and affordability (time).

(February 2006) Mirant announced that Robert M. Edgell would be appointed executive vice president and U.S. region head. The Southern California Edison board of directors elected James T. Reilly vice president of nuclear engineering and technical services for the San Onofre Nuclear Generating Station. KeySpan Corp.’s board of directors appointed Stephen W. McKessy lead director. Richard C. (Dick) Kelly was elected chairman of Xcel Energy Inc.’s board of directors. And others...