Law & Lawyers

Uncertainties over natural-gas prices, carbon regulation, and clean-technology alternatives are inhibiting investment in new power plants. An emissions “wargame” from Booz, Allen & Hamilton shows how companies might react to large, multidimensional changes in the generation landscape. The exercise raises strategic questions about competitive positions on the climate battlefront.

Lenders know there are billions of dollars of weak financial assets in the market, such as securities backed by bad mortgages. The problem is no one knows who is exposed at what level to those weak financial assets. This causes a lack of confidence in the lending industry, and a credit crunch that — if unabated — could cause a recession.

When setting the allowed returns on common equity of jurisdictional utilities, state regulatory authorities apply the virtually universal standard that the allowed returns should be similar to returns on common equity investments in companies of equivalent risk. Such returns generally are accepted as fair if they are no higher than necessary and still sufficient to attract investment. Despite the universality of this regulatory standard, our investigation of recent allowed returns by state commissions shows that a key risk—financial risk—as measured by accepted, measurable metrics, has not been a factor affecting the level of allowed returns in the United States in recent years.

The word “security” no longer means what it used to mean. Now, “security” means gates, guards and guns. It means protecting critical assets with a multi-layered cyber and physical perimeter. It means exercising vigilance and caution, and accepting inconvenience as a matter of routine.