IT

FERC proposed a new set of regulations, under the new section 219 of the Federal Power Act, explaining in broad outline how it might approve generous financial incentives for new investments in transmission—incentives once dubbed as “candy.” As of mid-January, the new NOPR had spawned more industry comment than just about any other FERC proposal in recent memory.

This overview of ratemaking and rate-design principles should ease the myriad tasks awaiting new rate analysts and attorneys, while provoking nostalgia among industry veterans still manning the ratemaking stations.

In our annual technology forum, we talk with tech/information specialists at four companies: Patricia Lawicki at PG&E; Ken Fell at the New York ISO; Mark C. Williamson at American Transmission Co.; and John Seral at GE Energy.

NERC up until now has been, in its own words, “a self regulatory organization, relying on reciprocity, peer pressure, and the mutual self-interest of all those involved in the electric system.” Nevertheless, can this tradition of kind, gentle, and voluntary consensus-building stand NERC in good stead as it seeks to transform itself in to a steel-fisted czar that would enforce mandatory standards?

Alignment of the business and the information technology (IT) functions within a company is critical to the effectiveness of any strategic initiative. Three years ago, our research identified a number of best practices in IT integration, as they affected M&A execution. What changed, according to our new survey, is the way senior IT executives and senior business managers define success in a merger transaction. With so much at stake in any merger, the distinctions between these two important management constituencies are critical.

With a heightened focus on risk management, it has become increasingly clear that traditional risk-management approaches do not adequately identify, evaluate and manage risk. An ERM approach integrates risk management with existing management processes, identifies future events that can have both positive and negative effects, and evaluates the effectiveness of strategies for managing the organization's exposure to those possible future events. ERM transforms risk management to a proactive, continuous, value-based, broadly focused, and process-driven activity.

The repeal of the 1935 Public Utility Holding Company Act has attracted a surprising amount of attention in the business and consumer press. But while some analysts predict a wave of utility M&A activity, others are more sanguine about the change.

The utility sector has been one of the best performing sectors in the equity capital markets for more than two years. In many respects, this has been a case of the rising tide lifting all ships.

In a survey of 305 North American utilities, 51 percent of the respondents said they either had outsourced or were planning to outsource a customer-care function in the next two years. But despite its advantages, outsourcing remains fraught with risk—the very reason that traditionally conservative utility companies have in the past shied away from letting third parties take over parts of their business.

When utilities evaluate business process outsourcing, they need to determine which processes are most advantageous to outsource—core or non-core? Rather than debating the merits of core or non-core, perhaps the more critical questions utilities should ask are: How are our key processes performing? Are they cost-efficient and effective? Do they enhance or inhibit our corporate performance?