(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.
Setting the stage for conservation.
America’s electric utilities understand their central role in taking efficiency and conservation to the next level. Accordingly, the industry has nearly doubled its spending on efficiency measures in the past few years. But encouraging customers to save energy won’t be enough to keep pace with the electricity demands of a growing digital economy. The country’s efficiency efforts will be most effective as part of a clean energy portfolio strategy.
ABB buys Ventyx; Powerspan and WorleyParsons CO2 capture test results; Honeywell lands Progress Energy contract; Opower releases customer engagement platform; HECO picks Siemens for smart-grid stimulus project; and MORE.
An alternative approach to climate regulation.
Low carbon prices might not produce sufficient incentives for firms to innovate and reduce emissions in the long run. But relatively high carbon prices can be politically unacceptable and invite consumer backlash. Where’s the right balance? A PUC chairman offers an alternative approach to managing GHG emissions.
Automation technologies promise a reliability revolution.
Utilities are using automation and back-office systems to improve their performance on outage management and service restoration. The next generation of smart-grid technologies promises a revolution in self-healing systems. But first the industry must gain confidence in the technology—and the business case for investment.
Balancing risks and opportunities in efficiency investments.
In June 2008, the New York Public Service Commission (PSC) established the electric energy-efficiency portfolio standards for New York’s investor-owned utilities. In its order, the PSC directed utilities to file three-year energy-efficiency plans. Later that year, the PSC issued a supplemental order approving shareholder incentives for utilities successfully implementing their portfolios. If all goes according to plan, the six affected IOUs stand to earn about $27 million annually in performance incentives over three years. The structure of the incentive mechanism approved by the PSC presents risk factors that might affect utilities’ ability to realize the full earning potentials the mechanism offers.
Pre-approvals demand a new approach to managing risks and costs.
Proving the need for new infrastructure construction for energy purchases has become more complicated for utilities. State commissions reserve the right to revisit rate-base investments after the fact, even when they’ve been pre-approved.
Duke Energy named Lynn J. Good group executive and CFO, replacing David L. Hauser, who left Duke to become chairman and CEO of FairPoint Communications. Pepco Holdings named Anthony J. Kamerick as senior v.p. and CFO. And others...