Energy Information Administration

When fighter pilots list the advantages of one combat aircraft over another, they do not speak primarily of speed. Rather, they refer to the ability of one aircraft to “turn inside” another, to negate other aspects of performance with a superior turning radius. For the utility industry, fundamental changes in technology, markets, or regulatory requirements can “turn inside” the ability of companies to respond, as long-lived investments and choice of fuels lock them into their strategic choices for decades. This article proposes ways for utility leaders to understand strategic risk better and manage it more effectively.

The renewed interest in coal as a fuel source for power generation will increase coal demand by up to 4 percent a year for the next 20 years. With so much coal produced domestically in this country, why are utilities choosing to import coal from producers located hundreds or thousands of miles from their plants?

The most important action regulators can take to minimize consumer electricity costs is, and will continue to be, ensuring competitive wholesale markets, while demanding a rich mixture of products from the suppliers in these markets.

Does the utility industry have the financial strength sufficient to meet the combined challenges of: (1) sharply increasing and highly volatile fuel and purchased-power costs; (2) significant capital investment requirements; and (3) rising interest rates?

By almost any measure, the nation is running short of transmission, and the existing volume of investment cannot long continue to reliably accommodate retail-load growth and larger wholesale volumes. Factors like environmental opposition also have caused declines and delays in transmission investment, but it seems clear that financial transmission rights and regulated returns have not sufficed to induce the necessary construction. The authors propose a new model to reward investors who lower congestion costs.

An analysis of what risks must be taken, in the short run, to significantly reduce carbon emissions with use of natural gas.

Top officials at several U.S. retail gas companies reveal how they are rethinking their business models and developing new approaches to serve customers in the face of supply concerns and price volatilities.

Don’t overlook high-quality, project-based emissions reductions.

By Mike Burnett and Bjorn Fischer

Mike Burnett is executive director of the Climate Trust. Bjorn Fischer is business development manager at the Climate Trust. Contact Fischer at bfischer@climatetrust.org. The Climate Trust is a non-profit committed to providing high quality, project-based reductions and advancing the policies that support them. Its offices are located in Portland, Ore.

The “N-word” in the title first appeared in this journal more than 20 years ago, courtesy of the celebrated environmentalist Amory Lovins and his widely quoted piece, “Saving Gigabucks with Negawatts” (Fortnightly, 1985). Scroll forward a few decades. With restructuring of wholesale electric markets at FERC, plus formation of regional transmission organizations and independent system operators, the game was changed.

Nine companies, consortia, or joint ventures are planning approximately 12 new nuclear power plants in the United States. How do the business challenges they face differ from the challenges faced by companies using other fuel sources?