Archives

PUR Guide 2012 Fully Updated Version

Available NOW!

This comprehensive self-study certification course is designed to teach the novice or pro everything they need to understand and succeed in every phase of the public utilities business.

Order Now

Strategy & Planning

Utilities' Role in Transport Electrification: Capturing Benefits for All Ratepayers

Byline: 

Nancy Ryan and Lucy McKenzie

An EV charging infrastructure network only provides value and reduces range anxiety to the degree it is well maintained.
Image: 
Figure 1 - Net Societal Benefits from EV Charging Load
Figure 2 - San Francisco Bay Area Feeder and Substation Utilization
Figure 3 - Net Ratepayer Benefits from EV Charging Load
Net societal benefits occur, in large part, because electric vehicles require less primary energy than their gasoline counterparts.
Utility load growth from EVs can actually benefit all ratepayers by providing societal benefits and reducing utilities’ average cost of service.
Author Bio: 

Nancy Ryan is a Partner at Energy and Environmental Economics (E3), and an economist with over two decades of energy experience. Dr. Ryan was formerly a Commissioner at the California Public Utilities Commission, where she held a number of other senior positions. She taught applied economics at UC Berkeley’s Goldman School of Public Policy for many years, and has held senior climate advocacy roles at Environmental Defense Fund. Lucy McKenzie is a Consultant at E3, where she focuses on electric vehicles and other distributed energy resources. She holds a Master of Public Policy degree from UC Berkeley’s Goldman School, and spent 5 years working on energy projects at economic consulting firm Analysis Group, Inc.

The authors would like to thank former CPUC Commissioner Rachelle Chong, as well as Hilary Staver and Eric Cutter of E3, for their thoughtful suggestions and review.

Category (Actual): 
EVs & Storage
Strategy & Planning
EVs, EV Charging & Storage

Utility load growth from EVs can actually benefit all ratepayers by providing societal benefits and reducing utilities’ average cost of service.

PPL CEO Interviewed

Byline: 

Bill Spence, with Steve Mitnick

What are the most exciting things happening at PPL? What were the biggest challenges in that journey? Were there some tough challenges you had to get through?
Author Bio: 

Bill Spence joined PPL in 2006 as executive vice president and chief operating officer. He was named president and CEO in 2011, and chairman in 2012. Previously, he served nineteen years with Pepco Holdings in senior management positions.

Category (Actual): 
Distributed Generation & Microgrids
Cybersecurity, Reliability & CIP
Strategy & Planning
Mergers & Acquisitions

We went to Allentown and talked with Bill Spence.

We Made Light Free

Byline: 

Steve Mitnick

Will lighting drop to a tenth of residential consumption, then below? Every use of a machine, appliance, device shrunk in its significance to the household budget.
Author Bio: 

Steve Mitnick is Editor-in-Chief of Public Utilities Fortnightly and author of the book “Lines Down: How We Pay, Use, Value Grid Electricity Amid the Storm.”

Category (Actual): 
Strategy & Planning

As inexpensive as lighting was, twenty years ago, we’ve since made it close to free. Too cheap to meter?

Defying the Odds

Byline: 

Herbert Wheary

Magazine Volume: 
Fortnightly Magazine - December 2012

Reports of coal’s demise are exaggerated. This summer, Dominion cleared the regulatory gauntlet to start up a new coal plant. Whether the example can be replicated might hinge on state incentives—and the forward price of natural gas.

Image: 
Figure 1 - Coal-Fired Emissions Progress
One of very few coal-fired power plants commissioned in recent years, the Virginia City Hybrid Energy Center uses air-cooled condensers (the green-topped structures) to reduce water consumption to one-tenth that of a comparable coal-fired plant.
A wood tipper delivers wood waste to the Virginia City circulating fluidized bed plant, which can burn up to 20 percent biomass along with coal.
The Virginia City plant’s fluidized bed boiler produces a much larger volume of solid waste than a most comparable pulverized coal plant would, due to the higher ash content of the coals used and partly because of the limestone sorbent mixed with fuel during combustion. At Virginia City, solid waste is stored onsite in a specially designed, 158-acre landfill.
Sidebar: 
Sidebar Title: 
Coping with Carbon at Virginia City
Sidebar Body: 

The Virginia City Hybrid Energy Center was already under construction when EPA issued its proposed rule regulating carbon dioxide at new sources, and therefore it isn’t subject to those restrictions. This facility is, however, well situated to deal with its carbon dioxide emissions, and the station’s owner, Dominion Resources, has supported research to establish a viable means of capturing and storing CO2.

While plans for the power station were proceeding and the permitting process was underway, carbon sequestration research funded in part by the U.S. Department of Energy was being undertaken near the Virginia City site. This work was conducted by the Virginia Center for Coal & Energy Research at Virginia Tech, and led by the Center’s Director Dr. Michael Karmis. It was coordinated by Southern States Energy Board and was part of the Southeastern Carbon Sequestration Partnership (SECARB). Dominion Resources provided matching funds for the investigation.

Karmis and his team succeeded in establishing the feasibility of sequestering carbon dioxide in un-mineable coal seams in central Appalachia. Estimated capacity of nearby seams to sequester carbon dioxide far exceeds the production of this gas over the lifetime of the Virginia City facility. The Virginia Tech team now is working to demonstrate using CO2 injection to enhance production of coal-bed methane from the area, while also sequestering the carbon dioxide.

Carbon capture technologies haven’t yet been tested at the Virginia City site. But to position the facility to take advantage of its proximity to coal seams that have proven suitable for sequestration, Dominion designed the plant with carbon capture in mind, and space has been set aside for installation of such equipment when it becomes commercially available—and upon approval by the Virginia State Corporation Commission.–HW

Author Bio: 

Herbert Wheary (haggiscat@live.com) is a private consultant on energy policy in Richmond, Va. The opinions in this article are the author’s and not necessarily those of the Commonwealth of Virginia or Dominion Resources.

Category (Actual): 
Permitting
Coal
Strategy & Planning

Virginia brings a new coal-fired plant online.

Demand Growth and the New Normal

Byline: 

Ahmad Faruqui and Eric Shultz

Magazine Volume: 
Fortnightly Magazine - December 2012

It’s tempting to attribute the recent slowdown in electricity demand growth entirely to the Great Recession, but consumption growth rates have been declining for at least 50 years. The new normal rate of demand growth likely will be about half of its historic value, with demand rising by less than 1 percent per year. This market plateau calls for a new utility strategy.

Image: 
Figure 1 - Electricity Sales Growth (Two-Decade Distributions)
Figure 2 - Cumulative Demand Growth (2010-2035)
Figure 3 - Arc of Price Responsiveness
Figure 4 - Impact of Codes and Standards on Electricity Consumption
Figure 5 - Efficiency Gains of ENERGY STAR Qualified Models
Figure 6 - ERCOT Loads in Texas (3/9/11 and 8/3/11)
Author Bio: 

Ahmad Faruqui is a principal at The Brattle Group, and Eric Shultz is a research analyst. This article was revised from Faruqui’s presentation at the Goldman Sachs Power & Utility Conference on Aug. 14, 2012. The authors acknowledge research assistance by Jennifer Palmer.

Category (Actual): 
DR & Conservation
Strategy & Planning
AMI (Smart Meters)

Five forces are putting the squeeze on electricity consumption.

Perfect Superstorm

Byline: 

Michael T. Burr, Editor-in-Chief

Magazine Volume: 
Fortnightly Magazine - December 2012

Since Obama won reelection, we must ask whether we’d rather have EPA cracking down on carbon emissions, or whether a legislated framework would be better for everyone.

Category: 
Frontlines
Author Bio: 

Michael T. Burr is Fortnightly’s editor-in-chief. Email him at burr@pur.com

Category (Actual): 
Environmental
Energy Policy & Legislation
Strategy & Planning

Could carbon taxes emerge in the election aftermath?

The Old Drawing Board

Byline: 

Michael T. Burr, Editor-in-Chief

Magazine Volume: 
Fortnightly Magazine - November 2012

PUCs are concerned that a rapid shutdown of coal-fired plants will start a full-tilt dash to gas—similar to the one that caused bankruptcies among independent power producers in the late 1990s and early 2000s. But this time around, ratepayers and not IPP investors will be stuck with the risk, if utilities rush to add all that new gas-fired capacity to rate base.

Category: 
Frontlines
Author Bio: 

Michael T. Burr is Fortnightly’s editor-in-chief. Email him at burr@pur.com

Category (Actual): 
Rate Cases
Natural Gas
Strategy & Planning

Portfolio planning in the age of gas.

Last Call

Byline: 

Michael T. Burr

Magazine Volume: 
Fortnightly Magazine - October 2012

Conditions are ideal for utility financing—but not forever. Although interest rates remain low, policy changes weigh on capital structures.

Image: 
Figure 1 - 10-Year Bonds
Figure 2 - 30-Year Bonds
Figure 3 - Utility Bond Tenors
Figure 4 - Utility & Power Ratings Snapshot
Rising interest rates and unknown dividend tax policies could be a headwind for utility stocks. –Brian Tate, Wells Fargo Securities
Utilities have a significant amount of capex planned in the near term, and bonus depreciation is not a funding strategy. –David Nastro, Morgan Stanley
There’s good reason to believe there will be a lot of M&A activity around contracted renewable assets in 2013. –Frank Napolitano, RBC Capital Markets
Sidebar: 
Sidebar Title: 
Pay It Forward
Sidebar Body: 

One way that some utilities have been getting ahead of market changes is by issuing equity to pre-fund costs they expect to incur later. This generally takes two forms: equity forward contracts, and mandatory convertible offerings. Examples include Pepco Holdings, which sold about $350 million in shares on a forward basis in March, and PPL, which sold about $270 million in April. Also, NextEra Energy issued $600 million in three-year, mandatory convertible bonds on May 1, and another $650 million in September.

Both approaches carry a premium, but they allow utilities to capture today’s high stock prices in a forward sale. And some issuers have found banks hungry enough to participate in equity deals that they’ll take a substantial haircut for the opportunity. (See “BofA loses $12m on bought convert,” IFR 1932, May 2012.)

However, terms likely will normalize as soon as the current confluence of forces drives utilities back into the equity markets in earnest.–MTB

Author Bio: 

Michael T. Burr is Fortnightly’s editor-in-chief. Email him at burr@pur.com.

Category (Actual): 
Strategy & Planning
Stocks / Equity Markets
Bonds / Debt Markets

Utilities are enjoying some of the best financing terms anybody’s ever seen. Is the party winding down?

A Virtuous Cycle

Byline: 

Andrew Heath

Magazine Volume: 
Fortnightly Magazine - October 2012

Data and experience show that serving customers well translates into better rate case outcomes. Conversely, poor performance starts a downward slide. J.D. Power and Associates research shows the correlation between customer service and financial returns.

Image: 
Figure 1 - Approved ROE And Customer Satisfaction
Figure 2 - Customer Expenses And Satisfaction
Figure 3 - Profitability and Customer Satisfaction
Figure 4 - Virtuous Cycle of Customer Satisfaction
Figure 5 - Rate Case Gap And Customer Satisfaction
Author Bio: 

Andrew Heath, Senior Director, Energy Practice, J.D. Power and Associates

Category (Actual): 
Customer Engagement
Rate Cases
Strategy & Planning

How customer satisfaction drives returns on equity for regulated electric utilities.

Views from the Bond Side

Byline: 

Josh Olazabal

Magazine Volume: 
Fortnightly Magazine - October 2012

Bond investors are keen for signs of a legitimate recovery, and will be looking to move into holdco bonds.

Category: 
Op Ed
Author Bio: 

Josh Olazabal is a vice president in the credit research group at PIMCO’s Newport Beach office. Previously he was a consultant with McKinsey & Co., and worked in corporate development at Duke Energy before that.

Category (Actual): 
Strategy & Planning
Bonds / Debt Markets

How fixed income investors view the utility sector.

Pages