DESCRIPTION (from Wiley.com)
The Enron scandal notwithstanding, it is important for professionals in the electric power industry and related positions gain a solid understanding of electric power systems and how they work. Written by two veteran power company managers and respected experts, this is a real-world view of electric power systems, how they operate, how the organizations are structured, and how electricity is regulated and priced.
A comprehensive overview of the electric power industry from the inside
Covers electric power system components, electricity consumption, generation, transmission, distribution, electric utility operation, electric system control, power system reliability, government regulation, utility rate making, and financial considerations.
Includes an extensive glossary of key terms used in the U.S. and also definitions for terms used worldwide.
Excerpt from the Introduction:
Electric-industry restructuring has derailed. The massive blackout of August 14, 2003 certainly was not needed to underscore the point, but it adds urgency to the effort to find solutions. Wholesale markets continue to evolve slowly and erratically but are impeded by state- federal conflict, regulatory and legislative uncertainty, malfeasance, poor credit and outright collapses, of which Enron is only the most notorious. FERC’s efforts to promote more efficient markets through regional transmission organizations and a wholesale market platform offer promise, but have generated confusion and opposition. In the last five years, increased generation competition has elicited more than 100,000 megawatts of gas- fired peaking and baseload capacity, which has contributed both to a period of relatively low wholesale prices in many regions and increased exposure to gas price volatility across the system. But competitors’ losses have created substantial uncertainty about how quickly and on what terms capital markets will support additional investment throughout this sector. Indeed, investment in all categories of electricity infrastructure is down significantly, in part because of surplus capacity conditions in certain regions, but also because of uncertainty concerning which entities have the responsibility for identifying and making investments in the transmission and distribution networks, and uncertainties about how the associated costs will be recovered. A challenge in reviving these capital flows is to clarify prospects for cost recovery and reward: for example, when and on what terms will distribution utilities have the ability to enter into long-term contracts with generation service providers; how will distribution utility responsibilities interact with the opportunities created for competitive retail suppliers in states with retail competition; who has the responsibility for identifying needed enhancements to the transmission network; how will they be paid for securing them; and who will pay? The August 2003 blackout is a reminder of how much hinges on finding practical answers promptly.
Excerpt from the Executive Summary:
The Department of Public Utility Control should require the electric distribution companies to procure a variety of Alternative Transitional Standard Offers that will promote the generation of electricity through renewable sources or the efficient use of energy resources in Connecticut. Such alternative Offers have significant potential to improve market stability and efficiency for all customers, to ameliorate environmental impacts of many kinds by reducing the combustion of fossil fuels, and to eventually reduce customer bills.
Excerpt from the Executive Summary:
Overall, the electric supply industry’s struggles continue for a third year. The string of events began with the price run-ups in California and the West in 2000 and 2001, continued with Enron’s disclosures and collapse in late 2001, was followed by disclosures of accounting improprieties and data misreporting, and has continued with the “credit crunch” the industry still faces. As if this was not enough to contend with, as this report was being finalized, the most widespread electrical blackout in North American history occurred. While the cause has not been determined at this time, it has already sparked a debate about possible causes and solutions and has renewed interest in federal energy legislation that was already under consideration by the U.S. Congress.
Excerpt from theIntroduction:
The era of electric and natural gas industry restructuring ushered in by Congress and implemented by FERC and state public utility commissions has now been in place for more than five years. In the wake of these momentous shifts in regulatory policy, electric and gas companies have responded with fundamental changes in their business strategies. Some have decidedly “stuck to their knitting,” while others have merged, sold assets, invested overseas and in new businesses, and in some cases completely abandoned their historic business roots. With the economic downturn, the collapse of merchant generators and the decided slowdown in industry restructuring, the time is opportune to examine corporate winners and losers from this unprecedented round of industry restructuring.
Winners and losers in the battle of restructuring can be measured from a variety of perspectives. The major constituents, however, are clearly shareholders and investors on one hand and consumers on the other. The focus of this analysis is the shareholder. In examining the impacts on shareholders, we look to a variety of related metrics that speak to financial performance.
Our analysis focuses on total shareholder return for the group of 64 companies that compose the Fortune 1000 energy companies.2 Within this mix is a combination of utilities, pipelines, energy merchants and independent generators with diverse business strategies. Aligning companies with their returns to shareholders paints a dramatic picture of widely differentiated financial performance. The degree of variation is particularly notable in light of an industry once noted for its stable returns appealing to the most conservative investors.