Our cover story, the annual Energy & Utilities Financial Rankings, is one of the perennial favorites at EL&P. It’s a popular feature even when the numbers don’t add up to much, as has been the case for several discouraging years. But the figures are out for 2004, and this time the news is good. Jean Reaves Rollins at the C Three Group looked at the results and concluded, “The stock market is saying, “˜We like this sector again.'”
With Wall Street inviting utilities back to the party, there’s a lot to celebrate. Add in the passage of the Energy Bill and we could be positively euphoric, at least for a while.
Congress has other promises to keep and the public more important issues to address (Will Jen and Brad ever get back together?), so EL&P will be bringing you the best analysis we can find as the energy bill evolves. We begin in this issue by talking with six experts in their fields.
On the generation side we talked with Scott Sklar, president of the Stella Group, about what he called “the crumbs” thrown to the renewables, and to Maria Scheller, vice president and power market analyst at ICF Consulting, for insights into the clean coal technology provisions. To find out how state regulators are reacting to the bill we spoke with North Carolina Utilities Commissioner Sam J. Ervin, IV, who also serves as the chairman of the Committee on Electricity at NARUC. The repeal of PUHCA, considered by some the cornerstone of the bill’s electricity title, was analyzed by Chuck Patrizia, partner at the law firm of Paul, Hastings, Janofsky & Walker LLP.
Finally, we cornered the presidents of EEI and the APPA, Tom Kuhn and Alan Richardson, respectively. They were candid about their expectations for the bill and their members’ reactions to it.
Everyone agreed that this is just the beginning of the hard work needed to actually define the bill. EL&P will be covering the development of the Electricity Modernization Act of 2005 for many moons to come.
I’m especially intrigued by some of the major policy directives of the bill. One is the increased role prescribed for the DOE and FERC. When the battle cry “Down with centralized planning” has so often been heard in this industry, it seems odd to find this much power being redirected to the federal level. Used to be they championed less government intervention, less government oversight, fewer rules and regulations. Makes you think. There are those who wonder if the bill’s reliability rules, for example, aren’t a guise for advancing other FERC objectives.
It’s possible, too, that we may see stranger coalitions than we have in the past. Nuclear energy supporters are already counting some mainstream environmentalists on their side because of global warming concerns. Imagine the much-maligned “tree-huggers” who support DG finding themselves on the right side of the aisle with the “less-government is better” libertarian types.
Related to this is the tension caused by the FERC’s backstop siting authority. Just uttering the words “eminent domain” sends shudders down the spines of most Americans. Considering the outcry caused by the recent Supreme Court decision that upheld a city’s power to condemn private property for economic purposes, it seems especially surprising to put such emphasis on it in this bill. Commissioner Ervin, for one, questions the necessity of increased power for FERC. He doesn’t believe it is the states that were actually creating the transmission siting log-jam. How and when FERC would wield this bigger stick remains to be seen.
As for the repeal of PUHCA: I’m sorry to see it go. I’m not convinced this was a good idea. Are we creating a new opportunity for more disruption in this industry? Like a mythical creature that gets stronger each time you chop off its head, the next variation of Enron will be smarter and faster and harder to catch. Overworked FERC and state regulators will be no match for corporations that want to hide the ball. This could very well lead again to consumer abuse and turmoil, as Alan Richardson, president of the APPA, predicts.
Does this energy bill provide the kind of vision our country needs? The president of EEI, Tom Kuhn, is one of the true optimists. He calls this a technology bill that will enable the United States to claim its international leadership role again. Let’s all bet on that outcome.
This is my first issue as managing editor. I had hoped to talk about my plans for the magazine in this column, but I’ve been upstaged by this darn energy bill. I will tell you that we are going to spend more time on international issues, and that we’ll be saving more space for the gas utilities. Some of the business stories I see as big are the evolving forms of utility ownership (think Portland, Montana, MidAmerican) and those elusive hedge funds that are starting to show dangerous signs of collapse.
We’ll also be adding a letters to the editor section. Probably something with a catchy name like “Letters to the Editor.” My e-mail address is email@example.com. Anything I receive is fair game for publishing. Wish me luck-and let me know how EL&P can better serve this most important of industries.