Business & Money

FERC's ruling on cash management programs will introduce new transparency into how utilities manage their cash.

On Oct. 22, the Federal Energy Regulatory Commission (FERC) ruled that FERC-regulated entities must file their cash management agreements with the commission and notify the commission within 45 days after the end of each calendar quarter when their proprietary capital ratio drops below 30 percent, and when it subsequently returns to or exceeds 30 percent.

Business & Money

Obtaining a position measurement in energy markets has become more complex and has increased financial risks for integrated utilities.

"What's your position?" The answer to that simple question in today's energy markets is anything but simple. In fact, answering this question may be the single most difficult challenge faced by a fully integrated energy firm in its efforts to manage risk.

Letters to the Editor / Corrections & Clarifications

To the Editor:

In a letter to the Oct. 1, 2003, , a letter from Lewis Evans and Kevin Counsell claims that a "pay-as-bid" day-ahead market would produce prices comparable to real-time prices even if loads understated their demand day-ahead, eliminating the incentive to underschedule (as allegedly happened in California).

Tomorrow's utility technology may be revolutionized at the molecular level.

Revolutionary changes have swept through the utility industry more than once. Although the industry often receives criticism for being slow to adapt, the fact is that utilities are continually building and rebuilding their systems and strategies around changing conditions. AAAAA AASuccess in utility planning often hinges on big things-like market restructuring or an upheaval on Wall Street. It can also depend on little things-like a piece of software or a metering device.

Technology Corridor

Has the Aug. 14 blackout finally made it more than a pipe dream?

 

Former Secretary of Energy Bill Richardson ticked off a whole lot of people in the industry when he pronounced the United States a superpower with "a Third World electricity grid."

Yet while debate continues about the causes of the Northeast blackout, there's no arguing that the majority of transmission and distribution in this country is controlled via mechanical technology largely developed in the 1950s.

A review of which technologies and companies stand to win and lose as a result of the 2003 blackout.

 

Mishap, human error, and malice regularly crash the electric system. We have lurched from the Western economic power crisis of 1999-2000 to the Eastern reliability power crisis of 2003. Neither more studies nor more blackouts have changed what's been built-an excessive quantity of large generation plants dependent on relatively few major transmission lines. On its current course, the grid's inevitable destination is disaster.

Benchmarks

Four factors could lead to further shockwaves.

 

The Northeast transmission grid has suffered a right cross to the jaw, but it could be followed by an uppercut of price spikes and volatility in generation markets by next summer.

In the wake of August's Northeast blackout, most experts agree that the transmission system in the Northeast has deficiencies.

Perspective

FERC should consider a two-part tariff to boost transmission investment.

 

Transmission, rather than generation, is generally the constraint preventing customers from getting the power they desire.

With just a few changes in reliability rules, regulators could call on consumer loads to boost power reserves for outages and contingencies.

 

In proposing a standard market design (SMD), the Federal Energy Regulatory Commission (FERC) makes clear that it wants customers to participate in wholesale power markets, such as by bidding an offer to curtail consumption, increase supply, and reduce upward pressure on prices.

"We believe in the direct approach of letting demand bid in the market," says FERC.

Chicken Little has cornered the market on gas price doom and gloom, but the data is inconsistent on whether high gas prices are here to stay.

A near-universal consensus of alarm appears to be emerging concerning North American gas supply adequacy. The steady march upward of spot gas prices and NYMEX futures over the past year confirms this coalescence of market sentiment. Way back in June 2002, you could still buy Rocky Mountain wellhead production for about $1.25/MMBtu, although Eastern U.S. markets had already exceeded $3.00/MMBtu.