Neal E. Schmale, Executive VP and CFO, Sempra Energy
Energy Trading & Risk Management: Gas price volatility has increased. Relying on antiquated scheduling systems is a recipe for disaster.
Given energy markets’ newfound volatility and the range of exposures that global energy firms must deal with, the reactive, reporting-oriented nature of transaction management practices is in need of serious revision. A new scheduling module can add tremendous strength and value to a company, primarily in the areas of gas logistics and risk management.
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.
Energy Trading & Risk Management: A better framework for making decisions is required to ensure earnings stability and shareholder value in the utilities industry.
Although utilities are refocusing attention on their traditional utility businesses, it is clear that the traditional utility decision-making framework is not sufficiently robust to meet the needs of today's utility executive. An effective executive decision framework provides better answers in the complex utility environment that exists today.
Change is the only certainty in today’s market.
The past year has allowed the North American power sector to continue its recovery, but it has been a treacherous time for investing. Asset values, and the value of their associated debt instruments, are being driven in the short term by an extreme fuel market and in the long term by a back-to-basics mindset among electric utilities. Still, asset valuations in most markets are not yet at replacement costs, leaving current investors with a residual level of risk.
Can a single utility dispatch a regional grid system without a financial market?
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?
The new chairman discusses the meaning of the Energy Policy Act of 2005.
The wide-ranging Energy Policy Act of 2005, signed into law by President Bush Aug. 8, already is affecting the energy industry—and guaranteeing that FERC will be a very busy agency. Fortnightly asked FERC Chairman Joseph T. Kelliher what the future holds for the commission.
Will eco-power survive the next five years?
"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.
The nation's critical electric infrastructure is still too vulnerable to outages.
The Sept. 12, 2005, electricity blackout of most of the city of Los Angeles demonstrates the continuing vulnerability of the nation's electric infrastructure. Although the cause of the Los Angeles outage was accidental, it exposed a glaring weakness: cable line breaks are an attractive, easy target for terrorists, because the U.S. electric network has thousands of miles of unguarded transmission and distribution lines.
Presenting a new management model.
Utility companies are at a crossroads when it comes to managing their pension plans. They must determine the best ways to continue to offer this benefit while controlling the impact these plans have on the overall financial health of the organization.