Several recent complaints involving PJM and now at FERC pose fundamental questions on how regulators and grid operators should attempt to price and allocate grid rights and costs. Is the transmission network a public asset, with costs that must be apportioned on principles of equity? Or, rather, is transmission an instrument of commerce, to be priced so as to maximize trade?

The District of Columbia Public Service Commission successfully has used two little known provisions in the Federal Power Act (FPA) to prevent an aging generating plant crucial to the national capital region’s reliability from being abruptly shut down by Virginia’s environmental regulators. In the end, the immediate threat to the region’s reliability was obviated while the environmental concerns associated with the plant were not ignored. The action resulted in a model for how federal energy regulators and environmental regulators can address similar problems in the future.

Applying the traditional rate-base concept to the new hybrid companies is where the gap between the old and the new regulatory paradigms resembles a deep schism. The current shifts in regulation should cause regulators to revisit and reconsider concepts that once reigned supreme in ratemaking.

The high stakes turf battle over whether FERC or the federal bankruptcy courts have jurisdiction over rejecting wholesale power contracts is now in its third round. Round one was fought in 2003 in the NRG bankruptcy case and ended in a settlement among the parties. Round two followed with the Mirant Chapter 11 case. Now punches and counterpunches are flying in round three: the Calpine bankruptcy.

Building a system to evaluate the leadership's ability to meet corporate goals.

Nominating committees and CEOs need to ask hard, fundamental questions about their own boards and their board's ability to formulate and govern effective and ethical business strategies. One way to know where you stand is to draw a basic matrix chart. Along the top, list the skill sets your board will require to move the company toward its future goals. Down the left-hand column, list each director. Then begin to check the skills that each current director brings to the board.

Interviews

For Public Utilities Fortnightly's 75th Anniversary CEO issue, the magazine looked to the horizon and asked these new captains about the planned course for their companies, and for an entire industry.

Commission Watch

The commission's power grab over bankruptcy courts condemns merchants to a corporate netherworld.

Since we last visited the conflict between the Federal Energy Regulatory Commission (FERC) and bankruptcy courts over who decides whether a debtor can terminate unprofitable power contracts,¹ a new district court decision out of Texas has come down tilting the field in favor of FERC's assertion of exclusive authority.

Cash flow reporting is more susceptible to manipulation than investors imagined.

Financial results are the prism through which investors view performance in the world of business. Companies may have tens of thousands of employees supplying tangible goods and services to customers, but real and diverse activities are reduced to relatively few numbers when companies are valued.

S&P, Moody's, and Fitch tell why credit issues now rule the energy sector.

This year saw energy companies forced to make some grim choices-issuing new stock in falling markets, angering investors with dividend cutbacks, selling prized assets at fire sale prices. Some blame it on the rating agencies-the bond kings-who imposed tougher credit standards after the fall of Enron.