2010 Law & Lawyers Report
The U.S. utility industry has never faced a more uncertain legal and regulatory landscape. From FERC demand-response pricing to state ratemaking disputes, legal trends and decisions are reshaping the power and gas market. The industry’s top legal minds provide strategic counsel. By definition, a battlefield is an ugly place. Conflict creates chaos, uncertainty and danger.
State case has national implications for grid modernization.
Strict adherence to cost-of-service ratemaking led to what might be considered a Luddite decision in the Maryland PSC’s initial rejection of BGE’s smart-grid filing. More than 60 years ago, the U.S. Supreme Court ruled that ratemaking calls for “pragmatic adjustments” to regulatory policy, toward the goal of sensible and effective rate orders. Delaying modernization doesn’t serve the aims of customer choice, conservation or electric system efficiency.
Itron deploys meter modules throughout Black Hills territory; Siemens to supply gas turbine packages to Mississippi Power; Cisco acquires Arch Rock for IP-based wireless smart metering applications; eMeter closes $12.5 million private-equity round; Enspiria helps NV Energy secure approvals for smart grid plan; American Superconductor invests in wind-turbine blade manufacturer; DOE selects 22 carbon-capture and storage projects for R&D funding; Petra Solar wins Sandia matching grant; plus announcements from Johnson Controls, Tantalus, Cooper Power, ComEd, UISOL, Convergys, SOLON and more
Funds collected for cost-of-removal liabilities could finance capital spending.
The industry might be overlooking a source of capital for smart-grid and similar investments. Funds collected in depreciation accounts for cost-of-removal liabilities could finance capital spending projects.
A renewable incentive expires with the Treasury grant program.
With incentives under the Treasury grant program set to expire at the end of the year, green-power development once again seems to be entering the bust phase of its perennial boom-bust cycle. Statutory deadlines presage a surge in new construction beginning between now and the end of the year. What happens after that depends on Congress.
Utility deals resume after 18 months of austerity.
Utilities are taking advantage of a sweet spot in the capital markets, pre-funding and refinancing at record low rates. But cheap money won’t resolve overhanging uncertainties preventing cap-ex projects and M&A deals. Greater certainty in America’s economic and policy outlook will clear a path for strategic change.
(September 2010) Capital spending and commodity prices are driving changes in financial performance. The 2010 Fortnightly 40 report shows growing success for companies with substantial unregulated assets. As the industry resumes its Big Build, regulatory relationships will determine the long-term strength of utility shareholder returns.
Alstom introduces a new 3-MW wind turbine, one of the world’s most powerful for onshore installations; Solyndra reports its larges-ever rooftop installation of cylindrical photovoltaic (PV) systems — a 704-kW project in New Jersey; Plug Power reports that its GenDrive fuel cell units will power Walmart Canada’s fleet of electric lift trucks at a Alberta distribution center.
The entire utility-consumer relationship must be reengineered.
The business case for advanced metering infrastructure (AMI) can’t be justified alone on operational savings to the utility. But critical assumptions involving process improvements and system efficiencies depend on customer involvement. This sequel to a September 2009 article examines customer engagement strategies and techniques.
Shaping long-term smart-grid strategy.
Making the business case for the smart grid is an important utility goal. It provides the justification for making or deferring required investments. Utilities might find it necessary to engage in a cycle of continuous strategic planning.