But transmission planning, as we know it, may never be the same.
The recent landmark ruling on transmission planning cost allocation, known as “Order 1000,” and issued by the U.S. Federal Energy Regulatory Commission in late July 2011, could well produce an unintended side effect — the formation of regional compacts among states to identify needs and plan for development of new power plant projects.
Rational estimates lead to reasonable valuations.
When regulators grant changes to utility rates of return, they estimate growth on the basis of gross domestic product (GDP). But do utilities have any chance of growing at the same pace as GDP? The answer is no — with huge consequences for utilities and their consumers. With equity costs outpacing allowed rates of return, utilities aren’t being valued correctly. As a result, the industry risks falling behind other sectors in terms of infrastructure investments and technology innovation.
(August 2011) Economic consultant Michael Rosenzweig challenges Constantine Gonatas’s proposal for ensuring FERC’s demand response rulemaking achieves its objectives. Also, Juliet Shavit takes issue with Contributing Editor Steven Andersen’s characterization of utility customers as “crazy.”
(July 2011) Williams Partners L.P. expands Transco transmission lines; Google to provide fiber optic Internet service for Kansas City, Mo.; Constellation Energy picks Lynxspring Inc.; plus contracts and developments involving Servidyne, EnerNOC, Siemens Energy and others.
Why electricity is good—and more is better.
A century of electrification shows clearly that more electricity—and cheaper electricity—enhances public health, raises living standards and also improves the environment. Conversely, higher prices harm businesses and families, with a disproportionate impact on low-income households. Public welfare goals are best served by public policies that make electricity more accessible and affordable to the masses—not less.
Protecting critical assets in a hazardous world.
In the wake of recent global-scale cyber intrusions, security concerns have expanded from being compliance and operational issues to fundamental risk management considerations. An integrated, enterprise-wide approach holds the greatest promise for securing critical utility infrastructure against increasing dangers in cyberspace.
Out of market means out of luck—even for self-supply.
When the U.S. Federal Energy Regulatory Commission issued its so-called ”MOPR“ decision in April 2011, approving a minimum offer price rule (or bid floor) for PJM RPM capacity market — and then on the very next day did much the same for New England’s FCM capacity market — FERC did more than just prop up prices. Instead, it created a nightmare scenario for utilities that still own their own generation. These utilities, who choose to “self-supply” with their own plants, rather than buy capacity from either the RPM or FCM, adequacy rules, could now be forced to pay twice for capacity — if their own plants are deemed inefficient or uneconomic.
Coping with rising profitability, a decade after restructuring.
With a recent flurry of gas pipeline rate investigations at the Federal Energy Regulatory Commission (FERC), many pipeline owners face the prospect of having their profits scrutinized to ensure their rates are just and reasonable. Understanding FERC’s approach will help companies ensure they’re not falling outside the zone of reasonableness.
Cap-ex plans raise the stakes for utility mergers.
Investors historically have been skeptical about merger synergies in utility mergers, assuming that regulators will insist that most or all economic benefits flow to customers. However, recent transactions suggest utilities are taking a different approach to valuing synergies that might strengthen the case for mergers — not just for the merging parties, but also for investors and regulators.
Not your father’s feed-in tariff.
The industry has struggled to craft a feed-in-tariff (FiT) structure that works for solar generators and utility customers, with mixed success. But now, the California Public Utility Commission might have found an approach that other states can replicate. CPUC’s FiT mechanism recognizes the value proposition of solar energy, and uses market forces to drive economic improvements, especially for distributed solar projects.