Commission Watch
FERC looks ahead to the new year as it wraps up loose ends from 2002.
FERC: SMD/Grid Issues Lead 2003 Agenda
Business & Money
A top investor explains what it would take for utilities to be included in one of the best-performing funds in the U.S.
Measuring Up to Jensen
A top investor explains what it would take for utilities to be included in one of the best-performing funds in the U.S.
Passing the standards for inclusion in the $1 billion plus Jensen Portfolio Fund is like being crowned the best-of-the-best in a given industry, analysts say.
Technology Corridor
Can utilities make a credible play for power line communications?
It's Now or Never for Power Line Broadband
Off Peak
Energy scandals have made the industry the target of CBS prime-time morality soap operas and a movie.
As the Megawatt Turns
Energy scandals have made the industry the target of CBS prime-time morality soap operas and a movie.
One can only guess which energy company CBS-TV's "Touched by an Angel" was thinking of when it featured the character David Satterfield, an executive at "Dyna Energy." And the CBS movie, "The Crooked E: The Unshredded Truth about Enron," left no doubt about which company was being thought of.
Energy Trading: Down But Not Out
The speculative electricity trading industry has a bad case of rigor mortis, but current efforts might breathe new life into the practice.
Trading is dead. At least that’s what some analysts are saying about the electricity markets. “Trading died with Enron on Dec. 2, 2001,” says Mark Williams, an energy risk management expert at Boston University. Whether trading is really dead or not, some signs of a rebirth are beginning to emerge.
Risk Experts Speak Out: Where the CCRO Fell Short
A surprisingly timid effort for an industry on the brink.
The purpose for the Committee of Chief Risk Officers (CCRO) recommendations, as stated in the introduction to their 198-page opus, is "to provide guidance on new methods and tools to establish a strong foundation for future growth in this (merchant energy) industry." But the reality is that the recommendations, almost without exception, fail to provide strong leadership in the areas of past and potential future abuse.
The CCRO Proposal: Missing the Industry Trend
Is a proposed solution to energy-trading woes too little too late?
Is a proposed solution to energy-trading woes too little too late?
The Committee of Chief Risk Officers (CCRO) representing various utilities and merchant energy companies, recently released a set of detailed guidelines to improve the image and overall practices of energy trading, but the effort misses the mark.
Avoiding Overpriced Risk Management: Exploring the Cyber Auction Alternative
Should an LDC procure electricity hedge products by using an Internet-based auction?
Should an LDC procure electricity hedge products by using an Internet-based auction?
We propose that local distribution companies (LDCs) should use an Internet-based auction to procure inactively traded products, because the auction is a superior alternative to common procurement methods, such as bilateral negotiation and request for offers (RFO). Supporting our proposal is the empirical evidence from two auctions recently held by a municipal utility in Florida.
Frontlines
The commission may find it's powerless on capital finance and credit issues. <p><b class="hook">Some say that without Alan Greenspan attending the Federal Energy Regulatory Commission's</b> (FERC's) Jan. 16 and Feb. 5 technical conferences on capital availability for energy infrastructure and energy market credit issues, the commission will have few options other than market enforcement and the design of fair and competitive markets</p> <p>In announcing the conferences in Washington, FERC declared its interest in clarifying the state of capital available to energy markets and infrastructure. But what, if anything, can the commission do to support the embattled energy merchant and energy trading space during its current credit crunch?</p> <p>Certainly, FERC's concern is understandable. What's the point in designing an energy market that has no participants? Furthermore, the commission is all too aware that illiquid wholesale markets don't end in "just and reasonable" prices.</p> <p>The issue is timely, with wholesale energy markets in a rather bleak state (see <i>"Energy Markets: Down but Not Out,"</i> on p. 18).</p> <p>Yet, given that FERC has no congressional authority to shore up confidence in markets by providing liquidity to avert a collapse in the sector, as the Federal Reserve did during the 1997 stock market crash, what can the commission do?</p> <p>The agency can provide performance-based ratemaking to attract infrastructure projects and their financiers in the area of transmission. In terms of energy markets, the commission can also develop a standard market that inspires investor and industry confidence. As everyone knows, properly designed markets would attract more market players and financiers, and thus provide liquidity.</p> <p>But FERC may have to face that it cannot bail out the industry from its current credit problems. Credit ratings analysts already predict a grim year for utilities.</p> <p>Fitch Ratings believes that a debt crisis will dominate the U.S. power sector in 2003 and could last well into 2004. "Companies that specialize in the sale of wholesale energy are coping by stretching out debt maturities, retaining the assets they can manage, shedding the rest, and hoping they will stay afloat long enough for energy demand and prices to strengthen," according to a Fitch report.</p> <p>Of course, FERC's inquiry opens up the controversial issue of whether the government should bail out the industry. Given events in the airline industry recently, the prevailing wisdom in Washington is that markets for airline transportation and power will have to sort themselves out.</p> <p> </p> <p class="center"><b>Articles found on this page are available to Internet subscribers only. For more information about obtaining a username and password, please call our Customer Service Department at 1-800-368-5001.</b></p>
FERC: Lender of Last Resort?
The commission may find it's powerless on capital finance and credit issues.
Some say that without Alan Greenspan attending the Federal Energy Regulatory Commission's (FERC's) Jan. 16 and Feb. 5 technical conferences on capital availability for energy infrastructure and energy market credit issues, the commission will have few options other than market enforcement and the design of fair and competitive markets
Commission Watch
State regulators redouble their deregulation efforts-or abandon them altogether.
Retail Energy in 2002: A Regulatory About-face
State regulators redouble their deregulation efforts-or abandon them altogether.
The past year was a phenomenal one for state public utility regulators.
A historical confluence of events, including the catastrophic failure of the move to deregulate California electric markets and a nationwide epidemic of corporate financial scandals, led in large part by energy trading firms, helps to explain the developments.