A retiree from Kansas writes the FERC to ask why it lets utilities "punish" their customers.
When senior citizens with time on their hands start taking an interest in utility regulation, you just know that's big trouble for bureaucrats. Ask James Hoecker, chairman of the U.S. Federal Energy Regulatory Commission.
Last month Hoecker opened his email box to find a short message from one Hersch Davis, a retiree from Wichita, Kan. Davis wrote the chairman on Sept.
Options and insurance each has a niche, but price collars are cheaper and more adaptable to market risk and customer behavior.
During the summers of 1998 and 1999, wholesale prices in the Midwest soared to $7,000 or more per megawatt, in comparison to a more typical summer price of $30 to $50 per megawatt. In a competitive environment, electricity suppliers - that is generators, utilities, marketers, etc. - will offer a variety of pricing products ranging from flat rates to real-time pricing (RTP). By varying degrees, price risk will be passed to the end-user.
The minimum stake that marketers must bring to the table.
Conventional wisdom says any commodity marketer requires scale and scope in order to succeed. But what constitutes scale and scope? Some specifics follow.
* Size. Balance sheet of sufficient size and strength to withstand the volatility of commodity prices. Minimum total asset base of $20 billion.
* Flexibility.
Lessons learned from Cinergy's losses in commodity markets.
After a second summer of extreme weather, contract defaults and consequent financial losses to energy companies, the financial community and shareholders are holding utilities ever more accountable when it comes to managing risk, say analysts. Moreover, they're showing zero tolerance for failure.
On Aug.
California again is the proving ground. Analysts see DG as the biggest issue since the PUC first mapped its "vision" for retail competition.
The T&D grid, once deemed a bottleneck, will now face pressure from both ends. Is it still the same old monopoly?
Some 30-odd years ago physicist and philosopher Thomas S. Kuhn coined the phrase "paradigm shift" to describe a radical change in a mental framework for interpreting facts. His key work, "The Structure of Scientific Revolutions," published in 1962, focused on the role of paradigms in scientific thought - such as the Copernican sun-centered solar system or Planck's work in quantum mechanics.
Federal data suggest it's not so in an "electrifying" economy.
Energy-related carbon emissions in the United States remained relatively flat last year, despite 4 percent U.S. economic growth. Although one year's data does not a trend make, the federal statistics seem to fly in the face of the notion that strict emissions cuts threaten the economy by raising energy prices and unemployment. Instead, says technology strategist Mark P. Mills, the figures evince a decade-old shift toward an electricity-driven economy.
According to the U.S.
Bigger payoffs for larger electric customers should surprise no one, says one exec, while a consultant blames the Fortnightly for obscuring the point.
It is not surprising that authors Bierman, Nelson and Stover ("Anomalies in Residential Electric Rates: Harbinger of Competition?" Public Utilities Fortnightly, July 15, 1999) found an increasing differential between residential and industrial rates. It also is not surprising that there is a correlation with deregulation activities. This situation is the natural result of competition causing subsidies to unwind.
Even the FERC's own lawyers urge a new rule when a customer leaves a utility that already has too little capacity.
In a brief filed Aug. 18, staff counsel Theresa Burns and Diane Schratwieser urged the Federal Energy Regulatory Commission to rethink its policy on wholesale stranded costs when a customer threatens to leave but the utility is so short of generating capacity that it can easily make up any lost revenues by reallocating the reserves to other native load customers at prevailing, regulated embedded-cost retail rates.
State PUCs
Gas Capacity Rights. The New York PSC told retail suppliers that to serve firm retail gas load they must have rights to firm, non-recallable, primary delivery point pipeline capacity for the five winter months, November through March, or else must augment secondary capacity with a standby charge payable to local distribution companies holding primary rights.