Given the free market in natural gas, why haven't prices attracted the needed infrastructure or supply? (LNG imports are actually down from last year.) What policies could have been contemplated ahead of national legislation? Or put more simply, why has supply lagged demand?

The Financial Accounting Standards Board SFAS No.143 identifies an immediate need for state public utilities commissions to recognize a refundable regulatory liability for past charges to ratepayers for non-legal asset retirement costs. Although these prior charges resulted in billions of dollars of regulatory liabilities on utilities' generally accepted accounting principles financial statements, they are almost invisible on the regulatory financial statements of the utilities. Unless the state PUCs specifically recognize the liabilities, the utilities will have the opportunity to institute a rate-base "cleansing" by transferring ratepayer-fronted money into income.

The utility regulatory process is prone to controversy, given the inherently adversarial roles and varied viewpoints among the utilities, regulators, and other stakeholders. Oft-heard pleas of "why can't you just see this issue my way" or "can't we all just get along" underscore the deep-seated frustrations of utility leaders and regulators in trying to find a common ground for addressing crucial issues surrounding the formulation of business strategies, establishment of responsible financial goals, and setting of operational performance standards for the regulated gas and electric distribution utility segments of the energy industry.

(November 2005) The results of annual survey of rates of return on equity authorized for major electric and natural-gas utilities—based on a sample of the retail rate cases conducted by state public utility commissions—show a vibrant and perhaps growing interest in traditional rate-of-return regulation.

As a rare amendment to a venerable statute, EPACT05 § 312, New Natural Gas Storage Facilities, made headlines, adding an option for interstate, market-based storage rate making. It would encourage new storage facilities by permitting FERC to authorize market-based storage rates, even when the applicant is unable to demonstrate it lacks market power. After authorizing such rates, FERC periodically must review them.The problem with the new law is that it does not specify those review periods.

A major objective of the Energy Policy Act of 2005 (EPACT) is to counter the worsened conditions in the natural-gas market that began in 2000 and are expected to continue over the next several years—namely, tight natural-gas supplies and high, volatile gas prices caused by a distinct shift in the supply-demand balance. Any noticeable reductions in gas prices that might be effectuated by the act will have little impact on natural-gas prices for a number of years.

The opposing challenges of higher gas prices and rising environmental concerns have put utility regulators in a difficult position: How can they bring rate stability while minimizing environmental impacts? At the same time, they are grappling with trends in consolidation, competition, transmission planning, and distribution service quality. Each state brings a different view of the changing utility landscape. For insight, Fortnightly brought together regulators from several states to discuss their plans and priorities for today and the future.

"If you build it they will come" has not proven to be applicable for green-power programs. Utilities have to build their programs in the right way, with the right rewards and incentives—then the customers will come. If utilities do not do this, then the effort to expand renewable energy markets will suffer a great setback, one from which it will take many years to recover.

One simple line in the recent Energy Policy Act sets the stage for broader geographical ownership by current utilities and easier ownership from outside industries. Readers know very well that one line calls for the repeal of the depression-era Public Utility Holding Company Act, and many pundits have stated that a wave of mergers and acquisition activity is now imminent.

Now comes Entergy’s pending plan to create an “Independent Coordinator of Transmission” to manage certain grid operations. On the surface, the plan would create independent accountability for the transmission grid, as called for in FERC Order No. 2000, with special attention paid to planning and expansion. Will the model work? Can it improve grid access for IPPs and reduce energy costs for Entergy’s ratepayers?