electric light & power - september,october 2009 (malestrom)
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Sep|Oct|2009
volume 87|05
www.elp.com
Climate PolicyRisk Management
Is Carbon Recyclinga Viable Alternative?
Energy Storagefor System Regulation
Big Solar,Small Footprint
Signs of Weakness2008 Utility Financial Rankings
Click here
to access
SpringEnergy 2009
Catalogue
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Answers for energy.
Getting more and more energy from fewer and fewer resources
is our never-ending mission.
In addition to excellent availability and utmost reliability, efficiency is a key requirement when it comes to
supplying energy for the worlds steadily growing megacities. Basically, it s all about making best use of all
resources. We apply this principle across the entire energy conversion chain to take efficiency to totally new
levels. Our new 800 kV transformer, for example, makes possible the efficient transmission of electric energy
in the gigawatt range over distances of 850 miles and more. And our new generation of gas turbines makes
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How can we get by with less when the
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Smart Distribution Solutions
www.selinc.com
info@selinc.com
+1.509.332.1890
The distribution solutions you use today from SEL
protection, communications,
sensing, monitoring, security, and controlall make your grid smarter. These smart
solutions pay for themselves by improving grid safety, reliability, and efficiency.
To learn more about how to make your distribution systems smarter, please visit our
website at www.selinc.com/9elp .
Automatically detect and isolate faults, restore power,
and monitor demand.
Schweitzer Engineering Laboratories invented the
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The business of power for utility executives
Sep|Oct|2009
volume 87|05
4 | ELECTRICLIGHT&POWER Sep|Oct|2009
Events 6
Commentary/Letter to the Editor 8
COLUMNS EE: Priniciples and Practice 12 How Low Can We Go? Driving
to Zero Net Energy Buildings
by Penni McLean-Conner, NSTAR
Benefit of Counsel 14Long-term PPAs
by Andrew Schifrin and Larry Eisenstat, Dickstein Shapiro LLP
Economic Inquiry 16Multipurpose Megawatts:
How Markets Define New Values
by Tanya Bodell, CRA International Inc.
Taking It Into Account 18 Misguided Market Design
or Market Manipulation?
by Dan Watikiss, Bracewell & Guiliani
FEATURESIndustry Report 20
The 2008 Utility Financial Rankings
Showing Signs of Weakness
by Teresa Hansen, editor in chief
SECTIONSFinance
Utility Financial Performance: 28
Warning Signs Ahead
by Brad Kitchens and Greg Litra,
ScottMadden Inc.
Pursuing Government Grants 32
by Michael A. Casey Herman and Phil Koos,
PricewaterhouseCoopers
GenerationClimate Policy Risk Management 36
in the Electricity Industry
by Richard Sandor and Michael Walsh,
Chicago Climate Exchange
38 Carbon Recycling: An Alternative
to Carbon Capture and Storage
by Rowan Oloman, contributing author
40 Econamine FG PlusSM
CO2-Capture Technology
by Dennis W. Johnson; Satish Reddy,
Ph.D.; Donald E. Broeils; and James
H. Brown, PE, PMP, Fluor Corp.
Renewables42 Solar Rising
by Robert Rogan, eSolar
46 Concentrating Solar Thermal
Energy and its Uses
by Roger Molina, PE, The M8Group
48 Big Solar, Small Footprint: The Role
Innovative Technologies
Play in our Energy Future
by Nancy Hartsoch, Solfocus Inc.
Energy Management52
Energy Storage for System Regulation:Why its Becoming Important
by Nancy Hartsoch, Solfocus Inc.
54 Outage Management
and Customer Relationships
by Guerry Waters, Oracle Utilities
IT/CIS & CRM56 Retrieve That Data ... and Make IT Snappy!
by Kristen Wright, associate editor
58 The Smart Way to Protect the Grid
From Cybersecurity Threatby David Owens, Edison Electric Institute
59 Planning for Another Challenging Year
by Jerry Duvall, CS Week
T&D60 Investment in New Transmission Projects
Remains Strong
by Thomas F. Garrity, Siemens
The Uncomfort Zone66
Bleed it OutBy Robert Evans Wilson Jr.
12
48
60
66
Cover photo: Copyright Jose Marafona
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We need partners that
understand our vision
Aclara leads.
Aclara understands that utilities need to do more
than collect data. We are driving a future that
integrates AMI, SCADA, distribution automation,
and more into an Intelligent Infrastructurewith
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Aclara Leads.
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E V E N T S
ELECTRICLIGHT&POWERis the official supporting publication of
March 23-25, 2010 : Tampa (Fla.) Convention Center
ELECTRICLIGHT&POWER is the official print publication of
May 2428, 2010 : Nashville, Tenn.
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6 | ELECTRICLIGHT&POWER Sep|Oct|2009
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OCTOBER
Oct. 19-21
The Business of Plugging
In: A Plug-In Electric
Vehicle Conference
Center for Automotive Research
http://pev2009.com
Oct. 21-22
Entelec Fall Seminar Series
Entelec
Denver
http://entelec.org
Oct. 21-22
Rate Case Cost Recovery:
Addressing Energy Efficiency,
Demand Response,
Renewable Energy, and
Smart Grid Investments
EUCI
Los Angeles
http://euci.com/
conferences/1009-rate-case
Oct. 26-28
Corporate Energy
Management Summit
IQPC
Chicago
http://corporateenergysummit.
com
Oct. 26-29
Air Quality VII: An International
Conference on Carbon
Management, Mercury,
Trace Elements, SOX, NO
X,
and Particulate Matter
Energy & Environmental
Research Center
Arlington, Va.
http://undeerc.org/AQ7
NOVEMBER
Nov. 9-10
Generation Summit VI Fall 2009
EUCI
Atlanta
http://euci.com/
conferences/1109-ccs/
agenda/php?ci=824
Standard Mail A Enclosed - P3
The business of power for utility executives
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BUILDING A WORLD OF DIFFERENCE
No matter what your personal beliefs are, or what your corporate
position is, climate change is an issue that has to be addressed.Enterprise Management Solutions (EMS), the management
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8 | ELECTRICLIGHT&POWER Sep|Oct|2009
Commentary
Teresa Hansen, editor in chief
Smart Grid Success Will Require Customer Cooperation
In a few weeks, the U.S. Department of Energy (DOE) will announcewhich utilities will receive the first round of stimulus funding made available by the American Re-
covery and Reinvestment Act, commonly called the stimulus plan. It will make available $4.5 billion
for smart grid projects that, according to Energy Secretary Steven Chu, will be a down payment on
our nations clean energy economy. The moneys No. 1 purpose is to preserve and create jobs, but
Chu and other industry experts have said the funding will jump-start needed modernization of the nations electricity
grid, helping the United States reach DOE goals of a clean energy economy.
Since the stimulus funding was created and announced in February, utilities have been feverishly working with
vendors and consultants to complete the stimulus applications and raise the matching funds required of companies
that are awarded stimulus funds. By the Aug. 6 deadline for the first round of funding applications, more than 45utility companies had applied for about $4 billion. Much of the money is planned for smart metering or advanced
metering infrastructure (AMI) projects aimed at enabling customers to better manage their energy use.
Once implemented, these AMI projects are expected to result in a substantial reduction in peak electricity
demand. Reduced demand should reduce the need to build more generation, resulting in a reduction in the countrys
greenhouse gas emissions and the impacts of global warming.
In addition to the work associated with completing the applications, utilities, vendors, government agencies and
other stakeholders have been working with the U.S. Commerce Departments (DOCs) National Institute of Stan-
dards and Technologies (NIST) to develop smart grid standards. They have made significant progress. Six months
after beginning the standards development process, the DOC released in September a draft report, NIST Framework
and Roadmap for Smart Grid Interoperability Standards, which identifies about 80 initial standards. Work on stan-
dards is continuing.
Much work also is being done to assure that a smart grid will be secure from cyberattacks. And, utilities andlawmakers are discussing new policies and regulations that will allow utilities to realign their business models to
achieve the smart grid goals and still create revenue for stockholders.
One critical area, however, that might not be getting the attention it needs is convincing utilities customers to
embrace the programs that will be made available with a smart grid. As I mentioned, much of the stimulus money re-
quested is planned for AMI projects. If these projects are approved for stimulus funding, millions of residential smart
meters will be installed, and with these installations will come numerous energy efficiency and demand response
programs for utility customers. At least initially, most of these programs will require customer buy-in and behavior
changes. To cut peak demand to the degree it will be needed, utilities must create and customers must participate in
new programs. Gaining customer participation will not be easy. Someone who works in the customer service area
of a large investor-owned utility told me recently that her company is having little success persuading customers to
enroll in electronic bill payment. She said that less than 5 percent of the utilitys residential customers pay their bills
electronically. Compare that with the credit card industry in which more than half of all credit card bills are paid elec-
tronically, and eight out of 10 credit card holders said being able to view their bills online was important to them. The
credit card industry has had much more success connecting with its customers. If utilities cant convince customers
to try electronic billing, will they be successful at convincing them to change their behavior?
The smart grids success at lowering electricity demand depends on customer behavior. If residential cus-
tomers do not respond to utilities programs aimed at reducing electricity usage, a lot of money is going to be
wasted.
Improving the power grids efficiency and reducing the need for more generating makes much more sense eco-
nomically and environmentally than building new power plants. A few hurdles must be cleared, and customer partici-
pation is probably the biggest. Utilities are used to tackling technology issues and dealing with regulatory issues. For
many, however, developing a range of products and services that will please different customers is new. Recruiting
product and service development expertise from banks and credit card companies might be a good strategy.
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www.smartgr idrea l i ty .com
Its time for reality about the smart grid.
The smart grid is a journeyone that ends with new ways to think about, manage and use our
precious energy resources. That journey starts here:www.smartgridreality.com
For the smart grid to mature, we need an honest discussion, stripped of the hype. Itrons new
site outlines what we see as critical components to making the smart grid a success.
Ready to know more? Visit www.smartgridreality.comfor a dose of reality.
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10 | ELECTRICLIGHT&POWER Sep|Oct|2009
Letters to the Editor
Dear Editor:Although some short-term savings may be realized by
purchasing infrastructure (transformers, cable, transmissions
structures) from foreign countries, in the long term this will
reduce our domestic manufacturing capabilities. This is a
homeland security issue, and if and when that manufacturing
capability is required, it wont be under our control.
Jim Stephenson, P.E.
West Islip, N.Y.
{In reference to Achieving Breakthrough Savings From
Low-cost Countries, July/Aug. 2009]
* * *
Dear Editor:
Ninety-five percent of the electricity consumed in Indiana
comes from coal, which means Hoosier consumers have
enjoyed some of the lowest rates in the nation. In tough
economic times like these, affordable electricity is something
we cant do without. Yet a bill that has made its way through
the U.S. House of Representatives threatens to rob our
consumers of that very necessity. On June 26, the U.S. House
of Representatives approved H.R. 2454, the American Clean
Energy and Security Act 2009 (ACES), otherwise known asthe Waxman-Markey cap-and-trade bill. The measure passed
by a marginal vote of 219-212, indicating how diverse views
are on this issue. While improvements were made to the bill
before it passed the House, Indianas not-for-profit consumer-
owned municipal and cooperative power providers have
serious concerns about the impact this legislation will have on
residential, commercial and industrial customers in Indiana.
One improvement in the bill was an adjustment from a
100 percent auction of carbon emission allowances to a partial
auction, with some free allowances being given to carbon-
emitting entities. However, Indiana utilities are being shorted
more than 35 percent beginning in 2012. Too many allowancesare being provided to nonemitting sources and special interest
groups, such as merchant generating plants that do not directly
serve customers. The end result is a redistribution of wealth
from the Midwest, which is heavily reliant on coal for electricity
generation, to the East and West coasts, which are not. The
distribution of allowances to East and West coast states and
merchant plants will do nothing to reduce carbon emissions
and will dramatically increase Indiana electric rates.
Under the current allowance allocation formula,
Indianas not-for-profit utilities receive less than 65 percent
of allowances needed to meet consumer needs, requiring us
to purchase more than 35 percent of the allowances in an
unregulated and speculative trading market.As it now stands, the ACES Act could have a devastating
effect on Indiana ratepayers and our state economy. Electric
rates would increase at least 20 percent by 2012, and could
double by 2026. This would be an undue hardship for our
economy, industry and fixed-income residential customers.
As further debate takes place, we continue to
recommend:
That the emissions formula be fixed to provide allowances
only to entities that directly serve consumers with power
from carbon-emitting resources.
That utilities receive up to 100 percent of the allowances
needed to comply with the mandate to minimize the rateimpact of the cap-and-trade program. Allowance prices
should have a safety valve to mitigate price spikes.
That the unrealistic emissions reduction mandate of 17
percent below 2005 levels by 2020 be amended to a rea-
sonable and achievable level. Such a revision is necessary
to provide breathing room for utilities to invest in carbon-
reduction technology without dramatically increasing our
Indiana electric rates, hopefully preventing further loss of
business and industry.
That Congress fund research and development into
carbon-reduction technologies to meet carbon-cap man-
dates.
We are not opposed to climate change legislation; we
simply seek to protect our members and their consumers,
the ratepayers of Indiana. The current ACES Act does not
safeguard against unfair price increases to Indiana consumers.
We encourage you to engage your congressmen on this issue.
We will continue spreading the message of this bills negative
effect on Indiana and keep doing our part to protect Indianas
electric rates. We urge consumers to contact Sens. Richard
Lugar and Evan Bayh and voice their support for a fair, balanced
and affordable approach to climate change legislation. Learn
more about the issue at http://fairpowernow.org.Raj Rao,
president & CEO, Indiana Municipal Power Agency
Steve Smith,
president & CEO, Hoosier Energy
Rick Coons,
president & CEO, Wabash Valley Power Association
Bruce Graham,
CEO, Indiana Statewide Association of Rural Electric
Cooperatives
Please send your comments and letters to Editor in Chief Teresa Hansen, teresah@pennwell.com.
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: r nc p es an ract cesC O L U M N
12 | ELECTRICLIGHT&POWER Sep|Oct|2009
A u t h o r
Penni McLean-Conner
is the vice president ofcustomer care at NSTAR,
the largest investor-
owned electric and gas
utility in Massachusetts.
McLean-Conner, a
registered professional
engineer, serves on
several industry boards
of directors, including
the Massachusetts
Technology
Collaborative and CSWeek. Her latest book,
Energy Efciency:
Principles and
Practices, is available
at http://pennwell
books.com.
Reducing energy wastehas become
a top priority in many states, hence the
rapid development and expansion of
energy efficiency (EE) programs na-
tionwide. Many energy thought leaders
ponder, How low can we go? Can we
achieve zero net energy buildings?
Yes, and zero net energy build-
ingswhich combine aggressive EE
measures with renewable distributedgeneration such as solarare in produc-
tion in the U.S. and around the world.
Massachusetts is one of several
states that have found zero net energy
buildings save energy costs and reduce
greenhouse gas (GHG) emissions. The
state has developed recommendations
to make zero net energy buildings the
norm by 2030. As utilities advance their
EE programs, it is important they de-
velop, understand and test strategies to
ensure zero net energy buildings are ap-propriately developed.
Zero Net Energy: What is It?
There are a variety of definitions with
respect to zero net energy buildings. A
2006 Department of Energy National
Renewable Energy Laboratory publica-
tion, Zero Energy Buildings: A Criti-
cal Look at the Definition, defines four
approaches:
Zero net site energy:Energy pro-
duced on-site is at least equal to the
energy used.
Zero net source energy: Energy
produced on-site is at least equal to
the energy used when energy use is
accounted for at its source. In this
case, there is accounting for energy
used to generate and deliver energyto the building.
Zero net energy cost:The money
a building owner pays a utility for
energy services and use is at least
equal to the amount that the utility
pays the owner for generating and
exporting energy.
Zero net energy emissions: On-
site production of emissions-free,
renewable energy is at least equal
to the energy used that comes from
emissions-producing sources.
Piloting Zero Net Energy Buildings
There are many efforts to advance build-
ing practices associated with zero net
energy buildings via pilots. These pilots
involve deep energy retrofits combined
with renewable distributed generation
achieving 50 to 90 percent reductions in
energy usage.
A deep retrofit on a residential
building, for example, involves ad-
vanced and fairly invasive EE measuresthat radically improve the energy per-
formance of an existing home. Dra-
matic energy reductions are achieved
by addressing all energy loads includ-
ing space conditioning, appliances, plug
loads and hot water. These projects are
costly because building practices and
materials are not yet standardized.
Efficiency measures that address
buildings shells are fundamental in
achieving energy reductions associated
with zero net energy buildings. Thesemeasures typically include an external
wall superinsulation build out, attic insu-
lation enhancements, foundation wall and
slab insulation, extensive whole-house air
sealing and high-performance windows.
These shell enhancements require a build
out of existing shells that involve build-
ing out window frames to support deeper
walls and building out roof eaves.
The EE measures are combined with
renewable energy sources. These mea-sures include leveraging natural daylight
to displace light fixtures, installing solar
hot water systems and augmenting with
distributed renewable generation.
To date in Massachusetts, five hous-
es have completed deep retrofits. John
Livermore remodeled his 1973 house to
achieve zero net energy. His efforts should
reduce energy use for heating 70 percent.
Livermore installed solar generation and
hot water to address the remaining energy
needs. He expects to produce excess elec-tricity equal to 1,500 kWh annually.
My motivation for taking action to
reduce our familys carbon footprint was
the understanding that carbon emissions
need to be reduced by about 90 percent
by 2030 in order to stabilize the earths
climate systems, and the realization that
I needed to take personal responsibil-
ity for reducing our emissions, Liver-
more said. We set out to demonstrate
what can be done to reduce the carbon
footprint of a suburban homeowner ona modest budget, with an overall goal to
reduce our homes net energy usage by
90 percent. We are currently well on our
way to achieving this target.
As utilities and other EE program
administrators expand EE plans, they
should include development of zero
net energy buildings. With research and
pilots devoted to zero net energy build-
ings, standardized building practices and
materials will become market-ready,
catapulting these building practices to acost-effective measure.
How Low Can We Go? Driving
to Zero Net Energy Buildingsby Penni McLean-Conner, NSTAR
A deep retrot on ahouse, for example,involves advancedand fairly invasiveEE measures thatradically improve theenergy performanceof an existing home,such as an externalwall superinsulationbuild out.
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Rough Made Easy.
Power plants are among the largest and most complex engineering and construction projects
in the world. Thats why customers turn to Bechtel when they need more power. For over 60
years, weve been providing governments and utilities with power facilities delivered on time
and within budget. Weve led the industry in every major sector, from fossil fuels to nuclear.
We set the pace for clean and efficient power generation, exploring renewable energy like
carbon capture, solar, geothermal and biomass, so our customers can meet their goals for
a sustainable future. Competing in a world hungry for power can be rough. Bechtel helps
make it easy.
BECHTELPOWERFrederick, Maryland, USA 1-301-228-8609 www.bechtel.com
San Francisco Houston London New Delhi Shanghai
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Copyright 2009, Oracle. All rights reserved. Oracle is a registered trademark of Oracle Corporation and/or its affiliates.Other names may be trademarks of their respective owners.
oracle.com/goto/utilitiesor call 1.800.275.4775
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conom c nqu ryC O L U M N
16 | ELECTRICLIGHT&POWER Sep|Oct|2009
A u t h o r
Tanya Bodell is vice
president of CRAInternational Inc. E-mail
her at tbodell@crai.com.
The most impor-
tant single central
fact about a free
market is that no
exchange takes
place unless both
parties benet.
- Milton Friedman
Competitive wholesale electricity
markets in the U.S. have evolved sub-
stantially. There are now many ways an
electron, or the promise of an electron,
can generate value. As we move toward a
new energy economy, expect to see new
markets that define new values.
Energy-only Markets
Energy-only markets conceptually paya single price for power. This price is
supposed to cover the variable costs
of production (e.g., fuel and variable
operations and maintenance) and the
fixed costs (e.g., capital investment and
the return on that investment required to
encourage new entrants). Market price
caps, however, limit the magnitude of
price spikes, resulting in missing money
otherwise required to cover fixed costs
of production.
Capacity Markets
Capacity markets developed to
cover the missing money that power
suppliers could not earn in energy-only
markets. New England, New York,
PJM Interconnection and Midwest
Independent Transmission System
Operator Inc. (MISO) have implemented
capacity markets in some form, and prices
have been set by competitive auctions for
future megawatts of capacity. Demand-
side response has been a big winner insome of these markets, foreshadowing
the potential for price-responsive retail
consumption to participate in wholesale
markets.
Virtual Markets
Several wholesale electricity markets
include day-ahead and real-time
settlement. Day-ahead markets allow the
market operator to schedule generation
resources and set prices for market
participants in advance of actual real-time prices. The divergence of settlement
prices between day-ahead markets and
real-time spot markets created implicit
arbitrage opportunities. Virtual markets
arose to allow for explicit hedging
opportunities. Competition has since
whittled down the differential to reflect
a day-ahead risk premium.
Financial Transmission Rights
Locational marginal pricing considerstransmission constraints in setting the
market clearing price. For those markets
with nodal pricing, markets for financial
transmission rights hedge the basis
differential between generation node
and delivery point.
Generation Attributes
Renewable energy credits (RECs)
formalized a separately defined
property right associated with
renewable resources. Generationinformation certificates allowed for
further differentiation. Markets for
these environmental commodities
establish verifiable claims for green
power retailers and compliance with
renewable portfolio standards. RECs
are being further defined into solar
renewable energy credits (SRECs) to
generate separate revenue streams for
future solar installations, and there has
been discussion about alternative energy
portfolio standards that include energyefficiency in the separately traded form
of negawatts.
And More to Come ...
With advanced metering, smart grid
penetration and energy storage solutions,
the following markets already are in
discussion:
Frequency Markets:Higher wind
penetration creates operational
implications for the transmission
system. Whereas traditional marketancillary services focus on system
variability in minutes, hours and
days, generators contribute to pow-
er system frequency regulation by
controlling primary energy supply
rates in seconds to minutes. Not al-
ways able to self-supply frequency
control, increased wind penetration
may require new markets for fre-
quency support services.
Demand-side Bidding: Demand-side bidding has been incorporated
into energy markets on a limited ba-
sismost recently through capac-
ity markets. As automated demand
control equipment and hybrid elec-
tric vehicles offer energy storage
and demand response at the retail
level, wholesale electricity market
rules may be revisited. Demand-
side bidding would allow demand
resources, in combination with
generators, to set real-time prices,thereby creating a market that ac-
counts for and possibly changes the
price elasticity of demand.
Economists design markets to send
proper and transparent price signals to
decrease the transaction costs of match-
ing supply to demand. As competitive
wholesale electricity markets evolved,
market forces have been at work. Prop-
erty rights and new markets for transact-
ing those rights have developed. A worldwith energy efficiency, electricity storage
and renewable resources will need new
markets to further define the sources
and value of otherwise indistinguishable
electrons.
How should you respond? Be
prepared to participate. Reactive market
participants respond to opportunities
that new and transitioning markets
generate. Proactive firms increase profits
by directing the formation of these new
markets and then participating in thosemarkets with vantage.
Multipurpose Megawatts:
Markets Define New Valuesby Tanya Bodell, CRA International
iStockphoto.com/McIninch
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a ng t nto ccountC O L U M N
18 | ELECTRICLIGHT&POWER Sep|Oct|2009
A u t h o r
Dan Watkiss is a partner
with Bracewell &Giuliani in Washington,
D.C., representing
power companies,
exploration and produc-
tion and midmarket
companies, natural
gas pipelines, power
and liqueed natural
gas project developers
and lenders, as well as
government agencies
and regulators. Youmay reach him at Dan.
Watkiss@bgllp.com.
The Federal Energy Regulatory
Commission (FERC) in a July order
endorsed its enforcement staffs report
that rejected allegations of the market
monitor for the New York Independent
System Operator Inc. (NYISO) that
certain circuitous wholesale electric
energy trades over eight paths in the
Northeast and Mid-Atlantic beginning in
2008 amounted to market manipulationor violations of the traders wholesale
power tariffs.
The NYISO monitor and others
had complained that the trades at issue
congested the power grid around Lake
Erie (attributable in part to a physical
phenomenon known as loop flow)
resulting in higher costs to power
consumers. FERCs order and the staff
report addressing these Lake Erie trades
are noteworthy in their articulation
of what distinguishes unlawfulmanipulation from transactions that
respond rationally to the price signals
from badly designed energy markets. As
energy markets expand geographically
and the volume of physical and financial
trading in energy products grows, this
distinction is likely to prove increasingly
important to the efficient design of
market structures and rules.
Laws and regulations proscribing
manipulation of energy markets have
proliferated in recent years. Mostrecently, the Federal Trade Commission
(FTC) announced it will put in place
in November new rules prohibiting
manipulation in wholesale petroleum
markets. The FTCs petroleum
regulations, implemented pursuant to
the Energy Independence and Security
Act of 2007, follow and largely track
FERCs earlier adoption of rules
forbidding manipulation of natural gas
and wholesale electric power markets.
All three sets of anti-manipulationrules are modeled on the Securities and
Exchange Commissions Rule 10b-5
that prohibits any act or omission that
results in fraud or deceit in connection
with the purchase of a security. The
specific anti-manipulation rule in the
Lake Erie order and report, similar to
Rule 10b-5, makes it a violation of the
Federal Power Act to use or employ any
device, scheme or artifice to defraud,
make an untrue statement of materialfact or omit a material fact or engage
in any act or practice that operates as a
fraud or deceit.
FERC and its staff determined
that the circuitously routed Lake Erie
trades caused the harms that the NYISO
monitor allegedthey contributed to
loop flows and power grid congestion,
increasing the cost of power to New
York consumersand for that reason
FERC authorized the NYISO to
prohibit prospectively the scheduling of
wholesale power trades over the eightidentified circuitous paths. Nevertheless,
the agency concluded that these trades
were not the product of any fraudulent
device, scheme or artifice. Rather,
they were induced by what the agency
characterized as a pricing methodology
mismatch among operators of the
New York, Ontario, Midwest and Mid-
Atlantic grid operators. During periods
of grid congestion, that mismatch made
it more profitable for a seller to schedule
through the four regional markets ratherthan more directly from source to sink.
Contrary to the NYISO monitor, that
pricing incentive simply exposed rather
than created a market inefficiency.
In analyzing the circuitously
scheduled transactions, FERC and its
staff detailed the profits and losses
traders incurred. That the circuitous
transactions more often than not were
profitable for sellers left the regulator
with no reason to doubt that theirmotive was simply one of responding to
price signals in the market. And because
FERC found no evidence that sellers
had attempted to affect price levels
artificially or conceal the circuitousness
of their scheduleseach leg of which
was correctly taggedthere was no
basis for finding market manipulation or
for imposing price mitigations available
under the NYISO tariff.
FERCs message in the Lake Erie
order and report is clear: If market
structures or rules make profitable andreward power transactions that are argu-
ably inefficient, that inefficiency will not
be mistaken as evidence of market ma-
nipulation. Rather, it will be received as
proof that the market structures or rules
are disjointed and in need of reform.
That message shows a more ma-
ture, deliberate approach to regulating
complex energy markets than charac-
terized earlier periods when any mar-
ket perturbation was assumed to be the
product of manipulation.
Misguided Market Design
or Market Manipulation?by Dan Watkiss, Bracewell & Guiliani
FERC determined that the circuitously routed Lake Erie trades caused the harms
that the NYISO monitor allegedthey contributed to loop flows and power
grid congestions, increasing the cost of power to New York consumersand
for that reason FERC authorized the NYISO to prohibit scheduling of wholesale
power trades over the eight identified circuitous paths.
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Industry Report
20 | ELECTRICLIGHT&POWER Sep|Oct|2009
The utility financial rankings were described as quiet in 2005, very good in 2006 and remarkable in 2007. From these
descriptions, its clear that utilities financial performance trended upward for several years in a row. The 2008 financial
rankings, however, show a different trend. Jean Reaves Rollins, who has provided the financial data for this report for the past
few years, said the 2008 rankings indicate the industry is showing signs of weakness.
When interviewed for this report last year, the country was already experiencing the recessions impact, and Rollins
predicted that 2008 would see a turn down. She did not think a year ago, however, that it would hit utilities as hard as it did.
The financial services meltdown was just becoming apparent (last September), and its impact on the general economy
took most by surprise, Rollins said.
As in years past, Rollins, head of The C Three Groupa senior management and research advisory firm to the energy
industryprovided data and commentary for this report, which provides Electric Light & Powerreaders with a glimpse at
utilities financial performance and health. For readers who wish to compare the market results year-after-year, previous
reports are available in archived September-October issues at http://elp.com.
by Teresa Hansen, editor in chief
Showing Signsof Weaknesss
The 2008 Utility Financial Rankings
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Industry Report
Sep|Oct|2009 ELECTRICLIGHT&POWER| 21
Table 1: Total Revenue RankingsCompany Total Revenues Total Revenues Total Revenues Total Revenues 2007-2008 2005-2008
2005 2006 2007 2008 Growth Rate Growth RateConstellation Energy $16,968,300,000 $19,284,900,000 $21,193,200,000 $19,818,300,000 -6.49% 16.80%
Exe lon $15 ,357 ,000 ,000 $15 ,655 ,000 ,000 $18 ,916 ,000 ,000 $18 ,859 ,000 ,000 -0.30% 22.80%
Southern Co. $13,554,000,000 $14,356,000,000 $15,353,000,000 $17,127,000,000 11.55% 26.36%
FPL Group Inc. $11,846,000,000 $15,710,000,000 $15,263,000,000 $16,410,000,000 7.51% 38.53%
Dominion Resources $17,809,000,000 $16,297,000,000 $15,674,000,000 $16,290,000,000 3.93% -8.53%
AES Corp. $10,247,000,000 $11,576,000,000 $13,588,000,000 $16,070,000,000 18.27% 56.83%
PG&E $11,703,000,000 $12,539,000,000 $13,237,000,000 $14,628,000,000 10.51% 24.99%
American Electric Power $12,111,000,000 $12,622,000,000 $13,380,000,000 $14,440,000,000 7.92% 19.23%
Edison International $11,852,000,000 $12,622,000,000 $13,113,000,000 $14,112,000,000 7.62% 19.07%
Integrys Energy $6,962,700,000 $6,890,700,000 $10,292,400,000 $14,047,800,000 36.49% 101.76%
FirstEnergy $11,989,000,000 $11,501,000,000 $12,802,000,000 $13,627,000,000 6.44% 13.66%
Consolidated Edison $11,343,000,000 $11,962,000,000 $13,120,000,000 $13,583,000,000 3.53% 19.75%
Public Service
Enterprise Group Inc. $11,849,000,000 $11,762,000,000 $12,853,000,000 $13,322,000,000 3.65% 12.43%Duke Energy $6,906,000,000 $10,607,000,000 $12,720,000,000 $13,207,000,000 3.83% 91.24%
Entergy Corp. $10,106,247,000 $10,932,158,000 $11,484,398,000 $13,093,756,000 14.01% 29.56%
Reliant Resources $9,711,995,000 $10,877,385,000 $11,208,724,000 $12,553,210,000 11.99% 29.25%
Willia ms Companies $9,781,000,000 $9,376,000,000 $10,558,000,000 $12,352,000,000 16.99% 26.29%
Centerpoint Energy $9,722,000,000 $9,319,000,000 $9,623,000,000 $11,322,000,000 17.66% 16.46%
Xcel Energy Inc. $9,625,477,000 $9,840,304,000 $10,034,170,000 $11,203,156,000 11.65% 16.39%
Sempra Energy $11,512,000,000 $11,761,000,000 $11,438,000,000 $10,758,000,000 -5.95% -6.55%
PEPCO Holdings $8,065,500,000 $8,362,900,000 $9,366,400,000 $10,700,000,000 14.24% 32.66%
DTE Energy Co. $8,094,000,000 $8,159,000,000 $8,506,000,000 $9,329,000,000 9.68% 15.26%
Progress Energy $7,948,000,000 $8,724,000,000 $9,153,000,000 $9,167,000,000 0.15% 15.34%
N iSou rce $7,895,800,000 $7,490,000,000 $7,939,800,000 $8,874,200,000 11.77% 12.39%
PPL Corp. $5,539,000,000 $6,131,000,000 $6,498,000,000 $8,044,000,000 23.79% 45.22%
Ameren Corp. $6,780,000,000 $6,880,000,000 $7,546,000,000 $7,839,000,000 3.88% 15.62%
At mos $ 4, 961, 873 ,0 00 $6 ,1 52, 363, 00 0 $5, 898 ,4 31, 000 $ 7, 221, 305 ,0 00 2 2. 43% 45. 54 %
NRG $2,400,000,000 $5,585,000,000 $5,989,000,000 $6,885,000,000 14.96% 186 .88%
CMS Energy $5,879,000,000 $6,126,000,000 $6,464,000,000 $6,821,000,000 5.52% 16.02%
UGI $ 4, 888, 700 ,0 00 $5, 22 1, 000, 000 $5, 476 ,9 00, 000 $ 6, 648, 200 ,0 00 2 1. 39% 35. 99 %
NortheastUtilitie s System $7,346,220,000 $6,641,716,000 $5,822,226,000 $5,800,095,000 -0.38% -21.05%
El Paso Corp. $3,359,000,000 $4,281,000,000 $4,648,000,000 $5,363,000,000 15.38% 59.66%
SCANA Corp. $4,777,000,000 $4,563,000,000 $4,621,000,000 $5,319,000,000 15.10% 11.35%
MDU Resources $3,403,923,000 $4,004,539,000 $4,247,896,000 $5,003,278,000 17.78% 46.99%
Wisconsin Energy Corp. $3,815,500,000 $3,996,400,000 $4,237,800,000 $4,431,000,000 4.56% 16.13%
OGE Energy Corp. $5,911,500,000 $4,005,600,000 $3,797,600,000 $4,070,700 ,000 7.19% -31.14%
New Jersey Resources $3,184,582,000 $3,271,229,000 $3,021,765,000 $3,816,210,000 26.29% 19.83%
Nicor Inc. $3,357,800,000 $2,960,000,000 $3,176,300,000 $3,776,600,000 18.90% 12.47%
Al li an t $ 3, 279, 600 ,0 00 $3 ,3 59, 400, 00 0 $3, 437 ,0 00, 000 $ 3, 681, 700 ,0 00 7. 12% 12. 26 %
Dynegy $2,017,000,000 $1,770,000,000 $3,103,000,000 $3,549,000,000 14.37% 75.95%
Sierra Pacic $3,030,219,000 $3,355,950,000 $3,600,960,000 $3,528,113,000 -2.02% 16.43%
Questar $2,724,888,000 $2,835,600,000 $2,726,600,000 $3,465,100,000 27.09% 27.16%
Allegheny Energy $3,037,887,000 $3,121,489,000 $3,307,020,000 $3,385,900,000 2.39% 11.46%
TECO Energy $3,010,000,000 $3,448,100,000 $3,536,100,000 $3,375,300,000 -4.55% 12.14%
Pinnacle West $2,987,955,000 $3,401,748,000 $3,523,620,000 $3,367,076,000 -4.44% 12.69%
Puget Energy $2,578,008,000 $2,907,063,000 $3,220,147,000 $3,357,773,000 4.27% 30.25%
NSt ar $ 3, 243, 120 ,0 00 $3 ,5 77, 702, 00 0 $3, 261 ,7 84, 000 $ 3, 345, 387 ,0 00 2. 56% 3. 15 %
Hawaiian ElectricIndustries Inc. $2,215,564,000 $2,460,904,000 $2,536,418,000 $3,218,920,000 26.91% 45.29%
M ira nt $ 2, 620, 000 ,0 00 $3 ,0 87, 000, 00 0 $2, 019 ,0 00, 000 $ 3, 188, 000 ,0 00 5 7. 90% 21. 68 %
Southern Union $1,266,882,000 $2,340,144,000 $2,616,665,000 $3,070,154,000 17.33% 142.34%
AGL Resources Inc. $2,718,000,000 $2,621,000,000 $2,494,000,000 $2,800,000,000 12.27% 3.02%
WGL Holdings $2,163,343,000 $2,637,883,000 $2,646,008,000 $2,628,194,000 -0.67% 21.49%
Vectren $2,028,000,000 $2,041,600,000 $2,281,900,000 $2,484,700,000 8.89% 22.52%
National Fuel Gas Co. $1,860,774,000 $2,239,675,000 $2,039,566,000 $2,400,361,000 17.69% 29.00%
L acl ede $ 1, 597, 032 ,0 00 $1 ,9 97, 551, 00 0 $2, 02 1, 594, 000 $ 2, 208, 97 3,0 00 9. 27% 38. 32 %
Southwest Gas $1,714,283,000 $2,024,758,000 $2,152,088,000 $2,144,743,000 -0.34% 25.11%
Piedmont Natural Gas $1,761,091,000 $1,924,628,000 $1,711,292,000 $2,089,108,000 22.08% 18.63%
PNM Resources $1,566,110,000 $1,963,360,000 $1,914,029,000 $1,959,522,000 2.38% 25.12%
W es ta r $ 1, 583, 278 ,0 00 $1 ,6 05, 743, 00 0 $1, 72 6, 834, 000 $ 1, 838, 99 6,0 00 6. 50% 16. 15 %
Portland General Electric $1,446,000,000 $1,520,000,000 $1,743,000,000 $1,745,000,000 0.11% 20.68%
Avista Corp. $1,359,607,000 $1,506,311,000 $1,417,757,000 $1,676,763,000 18.27% 23.33%
Great Plains Energy $2,604,882,000 $2,675,349,00 0 $3,267,100,000 $1, 670,100,000 -48.88% -35.89%
DPL Inc. $1,284,900,000 $1,393,500,000 $1,515,700,000 $1,601,600,000 5.67% 24.65%
Equitable Resources Inc. $1,253,724,000 $1,267,910,000 $1,381,406,000 $1,576,488,000 14.12% 25.74%
Ene rgen $1,128,394,000 $1,393,986,000 $1,435,060,000 $1,568,910,000 9 .33% 39.04%
Unisource Energy $1,224,056,000 $1,308,141,000 $1,381,373,000 $1,397,511,000 1.17% 14.17%
CH Energy Group $972,506,000 $993,433,000 $1,196,757,000 $1,332,851,000 11.37% 37.05%
Otter Tail Corp. $981,869,000 $1,104,954,000 $1,238,887,000 $1,311,197,000 5.84% 33.54%
Northwest Natural Gas $910,486,000 $1,013,172,000 $1,033,193,000 $1,260,793,000 22.03% 38.47%
CL ECO $ 920, 154 ,0 00 $1 ,0 00, 675, 00 0 $1, 02 5, 419, 000 $ 1, 080, 19 8,0 00 5. 34% 17. 39 %
El Paso Electric $803,913,000 $816,455,000 $877,427,000 $1,038,930,000 18.41% 29.23%
Northweste rn Corp. $1,165,750,000 $1,132,653,000 $1,200,060,000 $1,037,855,000 -13.52% -10.97%
B lack H il ls $613,541,000 $656 ,882 ,000 $695,914,000 $1 ,005 ,790 ,000 44.53% 63.93%
South Jersey Industries $906,016,000 $931,428,000 $956,371,000 $961,977,000 0.59% 6.18%
I da Cor p $ 842, 864 ,0 00 $9 26, 291, 00 0 $87 9, 394, 000 $ 960, 41 4, 000 9. 21% 13. 95 %
UIL Holdings $812,223,000 $846 ,721 ,000 $981,999,000 $948,720,000 -3.39% 16.81%
Allete (Minnesota Power) $737,400,000 $767,100,000 $841,700,000 $801,000,000 -4.84% 8.62%
MGE Energy $513,370,000 $507,546,000 $537,594,000 $595,993,000 10.86% 16.09%
Empire District Electric Co. $362,720,000 $412,171,000 $490,160,000 $518,163,000 5.71% 42.85%
Central Vermont $311,359,000 $325,738,000 $329,107,000 $342,162,000 3.97% 9.89%
Chesapeake Utilities $229,629,736 $231,200,591 $258,286,000 $291,443,477 12.84% 26.92%
Florida Public Utilities $130,123,000 $134,393,000 $136,542,000 $168,548,000 23.44% 29.53%
Delta Natural Gas $84,181,233 $117,247,144 $98,168,000 $112,657,117 14.76% 33.83%
RGC Resources $121,647,787 $107,797,750 $89,901,000 $94,636,826 5.27% -22.20%
Energy West $67,888,984 $74,695,561 $59,373,000 $76,833,248 29.41% 13.17%
Total $399,355,355,740 $425,932,242,046 $453,204,283,000 $492,195,363,668 8.60% 23.25%
6.65% 6.40% 8.60% 8.60%
Source: The C Three Group
Company Total Revenues Total Revenues Total Revenues Total Revenues 2007-2008 2005-2008
2005 2006 2007 2008 Growth Rate Growth Rate
A number of utilities saw their revenues drop, in
many cases, reflecting rapidly decreasing unit sales,
especially in the last half of 2008, Rollins said.
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Table 2: Capital ExpendituresCompany CapEx 2005 CapEx 2006 CapEx 2007 CapEx 2008 Change from Change from
2007-2008 2005-2008FPL Group Inc. $2,477,000,000 $3,739,000,000 $4,319,000,000 $4,550,000,000 5.35% 83.69%
Duke Energy $2,327,000,000 $3,381,000,000 $3,125,000,000 $4,386,000,000 40.35% 88.48%
Southern Co. $2,370,000,000 $2,994,000,000 $3,545,000,000 $3,961,000,000 11.73% 67.13%
American Electric Power $2,404,000,000 $3,528,000,000 $3,556,000,000 $3,800,000,000 6.86% 58.07%
PG&E $1,804,000,000 $2,402,000,000 $2,769,000,000 $3,628,000,000 31.02% 101.11%
Dominion Resources $2,763,000,000 $3,659,000,000 $3,621,000,000 $3,554,000,000 -1.85% 28.63%
Willia ms Companies $1,299,000,000 $2,509,200,000 $2,816,000,000 $3,475,000,000 23.40% 167.51%
Ex el on $ 2, 165, 000 ,0 00 $2 ,4 18, 000, 00 0 $2, 674 ,0 00, 000 $ 3, 117, 000 ,0 00 1 6. 57% 43. 97 %
FirstEne rgy $1,208,000,000 $1,315,000,000 $1,633,000,000 $2,888,000,000 76.85% 139.07%
Edison International $1,868,000,000 $2,536,000,000 $2,826,000,000 $2,824,000,000 -0.07% 51.18%
El Paso Corp. $1,474,000,000 $2,164,000,000 $2,495,000,000 $2,757,000,000 10.50% 87.04%
AES Corp. $826,000,000 $1,460,000,000 $2,425,000,000 $2,735,000,000 12.78% 231.11%
Progress Energy $1,439,000,000 $1,686,000,000 $2,201,000,000 $2,555,000,000 16.08% 77.55%
Questar $712,700,000 $909,800,000 $1,383,500,000 $2,437,200,000 76.16% 241.97%
Consolidated Edison $1,617,000,000 $1,847,000,000 $1,928,000,000 $2,322,000,000 20.44% 43.60%
Sempra Energy $1,377,000,000 $1,907,000,000 $2,011,000,000 $2,295,000,000 14.12% 66.67%
Entergy Corp. $1,704,436,000 $1,795,472,000 $2,098,102,000 $2,212,255,000 5.44% 29.79%
Xcel Energy Inc. $1,304,468,000 $1,626,000,000 $2,095,721,000 $2,112,135,000 0.78% 61.92%
Constellat ion Energy $760,000,000 $962,900,000 $1,295,700,000 $1,934,100,000 49.27% 154.49%
Ameren Corporatio n $935,000,000 $992,000,000 $1,381,000,000 $1,896,000,000 37.29% 102.78%
Public ServiceEnterprise Group Inc. $1,053,000,000 $1,015,000,000 $1,348,000,000 $1,771,000,000 31.38% 68.19%
Sierra Pacic $686,394,000 $986,019,000 $1,197,326,000 $1,535,503,000 28.24% 123.71%
PPL Corp. $811,000,000 $1,394,000,000 $1,685,000,000 $1,418,000,000 -15.85% 74.85%
DTE Energy Co. $1,065,000,000 $1,403,000,000 $1,299,000,000 $1,373,000,000 5.70% 28.92%
Equitable Resources Inc. $275,454,000 $403,094,000 $776,667,000 $1,343,996,000 73.05% 387.92%
Northeast
Utilities System $775,355,000 $872,181,000 $1,114,824,000 $1,255,407,000 12.61% 61.91%OGE Energy Corp. $297,200,000 $486,600,000 $557,700,000 $1,184,500,000 112.39% 298.55%
Wisconsin Energy Corp. $745,100,000 $928,700,000 $1,211,500,000 $1,137,100,000 -6.14% 52.61%
Great Plains Energy $328,900,000 $481,600,000 $516,000,000 $1,023,700,000 98.39% 211.25%
Centerpoint Energy $693,000,000 $1,007,000,000 $1,114,000,000 $1,020,000,000 -8.44% 47.19%
Allegheny Energy $306,461,000 $447,325,000 $848,397,000 $994, 100,000 17.17% 224.38%
Ni So ur ce $ 590, 400 ,0 00 $6 37, 400, 00 0 $788 ,3 00, 000 $ 969, 900 ,0 00 2 3. 04% 64. 28 %
Westar $212,814,000 $344,860,000 $748,156,000 $937,242,000 25.27% 340.40%
Pinnacle West $633,532,000 $737,779,000 $918,581,000 $935,577,000 1.85% 47.68%
SCANA Corp. $385,000,000 $522,000,000 $725,000,000 $904,000,000 24.69% 134.81%
NRG $106,000,000 $221,000,000 $481,000,000 $899,000,000 86.90% 748 .11%
Al li an t $ 538, 100 ,0 00 $3 99, 000, 00 0 $542 ,0 00, 000 $ 879, 000 ,0 00 6 2. 18% 63. 35 %
Puget Energy $583,594,000 $749,516,000 $737,258,000 $846,001,000 14.75% 44.96%
CMS Energy $593,000,000 $670,000,000 $1,263,000,000 $792,000,000 -37.29% 33.56%
PEPCO Holdings $467,100,000 $474,600,000 $623,400,000 $781,000,000 25.28% 67.20%
MDU Resources $377,856,000 $479,872,000 $558,283,000 $746,478,000 33.71% 97.56%
Mirant $101,000,000 $133,000,000 $560,000,000 $731,000,000 30.54% 623.76%
Dynegy $195,000,000 $155,000,000 $379,000,000 $611,000,000 61.21% 213.33%
TECO Energy $295,300,000 $455,700,000 $494,400,000 $589,500,000 19.24% 99.63%
Southern Union $279,721,000 $347,896,000 $616,883,000 $588,611,000 -4.58% 110.43%
Integrys Energy $401,900,000 $337,500,000 $376,900,000 $532,800,000 41.36% 32.57%
Atmos $333,183,000 $425,324,000 $392,435,000 $472,273,000 20.34% 41.75%
En er ge n $ 230, 715 ,0 00 $3 02, 177, 00 0 $373 ,8 57, 000 $ 460, 237 ,0 00 2 3. 11% 99. 48 %
NStar $387,265,000 $426,146,000 $360,130,000 $422,224,000 17.24% 9.03%
National Fuel Gas Co. $219,530,000 $294,159,000 $276,728,000 $397,734,000 43.73% 81.18%
Vectren $231,600,000 $281,400,000 $334,500,000 $391,000,000 16.89% 68.83%
Portland General Electric $255,000,000 $371,000,000 $455,000,000 $383,000,000 -15.82% 50.20%
AGL Resources Inc. $267,000,000 $253,000,000 $259,000,000 $372,000,000 43.63% 39.33%
Unisource Energy $203,428,000 $238,261,000 $245,366,000 $349,289,000 42.35% 71.70%
PNM Resources $221,814,000 $321,118,000 $400,903,000 $344,951,000 -13.96% 55.51%
CLECO $159,393,000 $236,495,000 $510,192,000 $335,757,000 -34.19% 110.65%
Black Hills $136,279,000 $308,450,000 $261,371,000 $328,922,000 25.84% 141.36%
Reliant Resources $82,296,000 $96,793,000 $118,856,000 $310,462,000 161.21% 277.25%
Allete (Minnesota Power) $58,600,000 $102,300,000 $210,200,000 $301,100,000 43.24% 413.82%
Sou thwest Gas $294,369,000 $345,325,000 $340,875,000 $300,217,000 -11 .93% 1.99%
Hawaiian ElectricIndustries Inc. $223,675,000 $210,529,000 $218,297,000 $282,051,000 29.21% 26.10%
Otter Tail Corp. $59,969,000 $69,448,000 $161,985,000 $265,888,000 64.14% 343.38%
Nicor Inc. $201,900,000 $187,400,000 $173,200,000 $249,900,000 44.28% 23.77%
DPL Inc. $169,600,000 $335,600,000 $346,200,000 $243,600,000 -29.64% 43.63%
I da Cor p $ 193, 314 ,0 00 $2 25, 048, 00 0 $28 7, 751, 000 $ 243, 54 4, 000 -1 5. 36% 25. 98 %
UGI $158,400,000 $191,700,000 $223,100,000 $232,100,000 4.03% 46.53%El Paso Electric $104,151,000 $120,784,000 $196,988,000 $224,478,000 13.96% 115.53%
Avista Corp. $219,358,000 $165,085,000 $209,091,000 $222,698,000 6.51% 1.52%
UIL Holdings $60,303,000 $76,774,000 $248,202,000 $215,728,000 -13.08% 257.74%
Empire District Electric Co. $68,638,000 $223,400,000 $183,393,000 $213,280,000 16.30% 210.73%
Piedmont Natural Gas $191,407,000 $204,116,000 $135,231,000 $181,001,000 33.85% -5.44%
WGL Holdings $112,768,000 $159,757,000 $164,531,000 $134,961,000 -17 .97% 19.68%
Northwest Natural Gas $96,000,000 $97,000,000 $118,100,000 $124,563,000 5.47% 29.75%
MGE Energy $85,771,000 $92,575,000 $136,258,000 $105,777,000 -22.37% 23.32%
Northwestern Corp. $80,877,000 $101,046,000 $258,341,000 $103,998,000 -59.74% 28.59%
CH Energy Group $63,879,000 $75,070,000 $84,601,000 $84,198,000 -0.48% 31.81%
New Jersey Resources $52,801,000 $66,293,000 $63,524,000 $73,446,000 15.62% 39.10%
South Jersey Industries $92,906,000 $73,677,000 $55,539,000 $61,972,000 11.58% -33.30%
Laclede $60,203,000 $63,416,000 $58,870,000 $56,621,000 -3.82% -5.95%
Central Vermont $17,558,000 $19,504, 000 $23,663,000 $36,835,000 55.66% 109.79%
Chesapeake Utilities $33,008,235 $48,845,828 $31,277,000 $30,755,845 -1.67% -6.82%
Florida Public Utilities $12,441,000 $13,116,000 $16,740,000 $11,227,000 -32.93% -9.76%
RGC Resources $7,427,000 $7,815,000 $6,004,000 $6,539,369 8.92% -11.95%
Delta Natural Gas $5,338,356 $7,781,396 $8,083,000 $5,563,667 -31.17% 4.22%
Energy West $2,187,614 $1,865,594 $2,407,000 $3,869,832 60.77% 76.90%
Total $51,086,137,205 $66,760,607,818 $79,629,387,000 $93,821,865,713 17.82% 83.65%
30.68% 19.28% 17.82% 17.82%
Source: The C Three Group
Company CapEx 2005 CapEx 2006 CapEx 2007 CapEx 2008 Change from Change from
2007-2008 2005-2008
2008 Utility Financial Rankings
2008 saw a decrease in capital expenditure growth,
but not an actual decrease in capital spending from
2007 to 2008. Rollins expects this trend to continue
in 2009.
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2008 Utility Financial Rankings
Table 3: Income From Continuing OperationsCompany Income From Income From Income From Income From
Continuing Continuing Continuing Continuing Change from Change fromOperations 2005 Operations 2006 Operations 2007 Operations 2008 2007-2008 2005-2008
Exelon $965,000,000 $1,592,000,000 $2,736,000,000 $2,717,000,000 -0.69% 181.55%
Dominion Resources $1,033,000,000 $1,530,000,000 $2,705,000,000 $1,836,000,000 -32.13% 77.73%
Southern Co. $1,591,000,000 $1,573,000,000 $1,734,000,000 $1,742,000,000 0.46% 9.49%
FPL Group Inc. $901,000,000 $1,281,000,000 $1,312,000,000 $1,639,000,000 24.92% 81.91%
Willia ms Companies $473,000,000 $3 47,000,000 $847,0 00,000 $1,418,000,000 67.41% 199.79%
American Electric Power $1,029,000,000 $1,002,000,000 $1,144,000,000 $1,368,000,000 19.58% 32.94%
FirstEnergy $891,000,000 $1,254,000,000 $1,309,000,000 $1,342,000,000 2.52% 50.62%
Duke Energy $893,000,000 $1,080,000,000 $1,522,000,000 $1,279,000,000 -15.97% 43.23%
Entergy Corp. $943,125,000 $1,133,098,000 $1,134,849,000 $1,220,566,000 7.55% 29.42%
AES Corp. $365,000,000 $176,000,000 $495,000,000 $1,216,000,000 145.66% 233.15%
Edison International $1,137,000,000 $1,181,000,000 $1,098,000,000 $1,215,000,000 10.66% 6.86%
Mirant ($1,385,000,000) $1,752,000,000 $433,000,000 $1,215,000,000 180.60% -187.73%
PG& E $ 904, 000 ,0 00 $9 91, 000, 00 0 $1, 006 ,0 00, 000 $ 1, 184, 000 ,0 00 1 7. 69% 30. 97 %
Sempra Energy $913,000,000 $1,091,000,000 $1,125,000,000 $1,113,000,000 -1.07% 21.91%
NRG $68 ,000 ,000 $543,000,000 $569,000,000 $1,016,000,000 78.56% 1394.12%
Public ServiceEnterprise Group Inc. $837,000,000 $679,000,000 $1,319,000,000 $983,000,000 -25.47% 17.44%
Consolidated Edison $745,000,000 $740,000,000 $925,000,000 $922,000,000 -0.32% 23.76%
PPL Corp. $678,000,000 $865,000,000 $1,288,000,000 $922,000,000 -28.42% 35.99%
El Paso Corp. ($506,000,000) $531,000,000 $436,000,000 $823,000,000 88.76% -262.65%
Progress Energy $523,000,000 $551,000,000 $693,000,000 $773,000,000 11.54% 47.80%
Questar $325,681,000 $444,100,000 $507,400,000 $683,800,000 34.77% 109.96%
Xcel Energy Inc. $508,731,000 $567,513,000 $573,107,000 $645,720,000 12.67% 26.93%
Ameren Corp. $628,000,000 $547,000,000 $618,000,000 $605,000,000 -2.10% -3.66%
DTE Energy Co. $537,000,000 $433,000,000 $971,000,000 $546,000,000 -43.77% 1.68%
Centerpoint Energy $225,000,000 $432,000,000 $399,000,000 $447,000,000 12.03% 98.67%
Allegheny Energy $63,065,000 $319,321,000 $412,214,000 $395,400,000 -4.08% 526.97%
Wisconsin Energy Corp. $303,600,000 $312,500,000 $336,500,000 $358,600,000 6.57% 18.12%
SCANA Corp. $320,000,000 $310,000,000 $320,000,000 $346,000,000 8.13% 8.13%
En er ge n $ 173, 012 ,0 00 $2 73, 570, 00 0 $309 ,2 33, 000 $ 321, 915 ,0 00 4. 10% 86. 07 %
Dynegy $81,000,000 ($308,000,000) $324,000,000 $319,000,000 -1.54% 293.83%
CMS Energy ($94,000,000) ($90,000,000) ($227,000,000) $300,000,000 -232.16% -419.15%
PEPCO Holdings $371,200,000 $248,300,000 $334,200,000 $300,000 ,000 -10.23% -19.18 %
Southern Union $153,096,000 $217,083,000 $228,711,000 $295,151,000 29.05% 92.79%
MDU Resources $265,291,000 $307,778,000 $322,786,000 $293,673,000 -9.02% 10.70%
Alliant $56,400,000 $338,300,000 $424,700,000 $280,000,000 -34.07% 396.45%
National Fuel Gas Co. $189,488,000 $138,091,000 $337,455,000 $268,728,000 -20.37% 41.82%
NortheastUtilities System ($256,903,000) $132,936,000 $245,896,000 $260,828,000 6.07% -201.53%
Equitable Resources Inc. $258,574,000 $216,025,000 $257,483,000 $255,604,000 -0.73% -1.15%
DPL Inc. $174,400,000 $139,600,000 $221,800,000 $244,500,000 10.23% 40.19%
NStar $196,135,000 $206,774,000 $221,515,000 $237,547,000 7.24% 21.11%
OGE Energy Corp. $161,200,000 $262,100,000 $244,200,000 $231,400,000 -5.24% 43.55%
AGL Resources Inc. $193,000,000 $212,000,000 $211,000,000 $217,000,000 2.84% 12.44%
UGI $187,500,000 $176,200,000 $204,300,000 $215,500,000 5.48% 14.93%
Pinnacle West $223,163,000 $317,143,000 $298,780,000 $213,557,000 -28.52% -4.30%
Sierra Pacic $82,237,000 $277,451,00 0 $197,295,000 $208,887,000 5.88% 154.01%
Atmos $135,785,000 $147,737,000 $168,492,000 $180,331,000 7.03% 32.81%
W es ta r $ 134, 868 ,0 00 $1 65, 309, 00 0 $168 ,3 54, 000 $ 178, 140 ,0 00 5. 81% 32. 08 %
TECO Energy $211,000,000 $244,400,000 $398,900,000 $162,400,000 -59.29% -23.03%
Puget Energy $146,283,000 $167,224,000 $184,464,000 $154,929,000 -16.01% 5.91%
Vectren $136,800,000 $108,800,000 $143,100,000 $129,000,000 -9.85% -5.70%
Integrys Energy $157,400,000 $155,800,000 $251,300,000 $124,800,0 00 -50.34% -20.71%
Great Plains Energy $160,700,000 $126,000,000 $157,600,000 $119,500,000 -24.18% -25.64%
Nicor Inc. $136,300,000 $128,300,000 $135,200,000 $119,500,000 -11.61% -12.33%
WGL Holdings $106,072,000 $94 ,694 ,000 $107,900,000 $116,523,000 7 .99% 9.85%
New Jersey Resources $18,535,000 $221,908,000 $65,281,000 $113,910,000 74.49% 514.57%
Piedmont Natural Gas $101,270,000 $97,189,000 $104,387,000 $110,007,000 5.38% 8.63%
CLECO $180,779,000 $72 ,856 ,000 $151,331,000 $102,141,000 -32 .50% -43 .50%
I da Cor p $ 63, 661, 00 0 $1 00, 075, 00 0 $82 ,2 72, 000 $ 98, 414 ,0 00 1 9. 62% 54. 59 %
Hawaiian ElectricIndustries , Inc. $126,689,000 $108,001,000 $84,779,000 $90,278,000 6.49% -28.74%
Portland General Electric $64,000,000 $71,000,000 $145,000,000 $87,000,000 -40.00% 35.94%
Allete (Minnesota Power) $17,600,000 $77,300,000 $87,600,000 $82,500,000 -5.82% 368.75%
NiSource $306,800,000 $281,800,000 $321,400,000 $79,000,000 -75.42% -74.25%
El Paso Electric $35,522,000 $67,450,000 $74,753,000 $77,621,000 3.84% 118.52%
South Jersey Industries $39,770,000 $72,250,000 $62,659,000 $77,178,000 23.17% 94.06%Avista Corp. $44,988,000 $72,941,000 $38,475,000 $73,620,000 91.35% 63.64%
Northwestern Corp. $61,547,000 $37,900,000 $53,191,000 $69,525,000 30.71% 12.96%
Northwest Natural Gas $58,149,000 $63,415,000 $74,497,000 $67,601,000 -9.26% 16.25%
Sou thwest Gas $43 ,823 ,000 $83 ,860 ,000 $83 ,246 ,000 $60 ,973 ,000 -26 .76% 39.13%
L acl ede $ 40, 070, 00 0 $4 8, 989, 000 $49 ,7 71, 000 $ 57, 526 ,0 00 1 5. 58% 43. 56 %
MGE Energy $32,091,000 $42,423,000 $48,825,000 $52,768,000 8.08% 64.43%
UIL Holdings $33 ,476 ,000 $58,716,000 $46 ,693 ,000 $48,385,000 3 .62% 44.54%
Empire District Electric Co. $24,944,000 $40,029,000 $33,181,000 $39,722,000 19.71% 59.24%
Otter Tail Corp. $53,902,000 $51,112,000 $53,225,000 $35,125,000 -34.01% - 34.84%
CH Energy Group $44,291,000 $43,084,000 $42,636,000 $35,081,000 -17.72% -20.79%
Central Vermont $5,978,000 $17,984,000 $15,436,000 $16,017,000 3.76% 167.93%
Unisource Energy $52,253,000 $6 9,243,000 $58,3 73,000 $14,021,000 -75.98% -73.17%
Chesapeake Utilities $10,467,614 $10,506,525 $13,198,000 $13,607,259 3.10% 29.99%
Delta Natural Gas $4,998,619 $5,024,635 $5,298,000 $6,829,868 28.91% 36.64%
RGC Resources $3,387,933 $3,511,531 $3,806,000 $4,257,824 11.87% 25.68%
Florida Public Utilities $4,219,000 $4,140,000 $3,272,000 $3,457,000 5.65% -18.06%
Energy West $927,713 $1,911,249 $2,257,480 $3,311,375 46.68% 256.94%
Bl ack Hi ll s $ 32, 792 ,00 0 $7 4, 046, 000 $10 0, 124, 000 ($52,167,000) -152.10% -259.08%
PNM Resources $51,113,000 $107,960,000 $59,3 58,000 ($305,272,000) -614.29% -697.25%
Reliant Resources ($330,556,000) ($327,812,000) $365,107,000 ($748,112,000) -304. 90% 126.32%
Constellat ion Energy $535,900,000 $748,600,000 $822,400,000 ($1,314,400,000) -259.82% -345.27%
Total $21,412,590,879 $30,088,559,940 $36,991,565,480 $34,819,424,326 -5.87% 62.61%
40.52% 22.94% -5.87% -5.87%
Source: The C Three Group
Company Income From Income From Income From Income From
Continuing Continuing Continuing Continuing Change from Change fromOperations 2005 Operations 2006 Operations 2007 Operations 2008 2007-2008 2005-2008
While utilities have focused on adjusting to and oper-
ating in the economic recession, many have an even
bigger issue to address pending environmental
legislation.
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8/10/2019 Electric Light & Power - September,October 2009 (Malestrom)
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8/10/2019 Electric Light & Power - September,October 2009 (Malestrom)
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Industry Report
26 | ELECTRICLIGHT&POWER Sep|Oct|2009
2008 Utility Financial Rankings
Table 4: Free Cash FlowCompany Calculated Free Calculated Free Calculated Free Calculated Free
Cash Flow Cash Flow Cash Flow Cash Flow2005 2006 2007 2008
Exelon ($18,000,000) $2,417,000,00 0 $1,822,000,000 $3,434,000,000 88.47% -19177.78%
Entergy Corp. ($236,628,000) $1,652,367,000 $461,668,000 $1,111,745,000 140.81% -569.83%
Public ServiceEnterprise Group Inc. ($104,000,000) $916,000,000 $570,000,000 $574,000,000 0.70% -651.92%
NRG ($38,000,000) $187,000,000 $1,036,000,000 $535,000,000 -48.36% -1507.89%
UGI $279,300,000 $87 ,700 ,000 $233,100,000 $232,300,000 -0.34% -16 .83%
DTE Energy Co. ($64,000,000) $53,000,000 ($174,000,000) $186,000,000 -206.90% -390.63%
PPL Corp. $577,000,000 $364,000,000 ($114,000,000) $171,000,000 -250.00% -70.36%
NStar ($26,886,000) $533,461,000 $131,250,000 $120,864,000 -7.91% -549.54%
DPL Inc. $134,000,000 ($48,800,000) ($28,100,000) $119,600,000 -525.62% -10.75%
En er ge n $ 104, 409 ,0 00 $1 80, 743, 00 0 $110 ,3 10, 000 $ 108, 996 ,0 00 - 1. 19% 4. 39 %
National Fuel Gas Co. $ 97,816,000 $177,241,000 $117,469,000 $85,042,000 -27.60% -13.06%
Northwest Natural Gas ($16,934,000) $51,566,000 $65,540,000 $73,763,000 12.55% -535.59%New Jersey Resources $152,021,000 ($89,286,000) $58,882,000 $58,922,000 0.07% -61.24%
MDU Resou rces $105,383,000 $179 ,603 ,000 $4,909,000 $39 ,709 ,000 708 .90% -62 .32%
Vectren $36,800,000 $28,800,000 ($36,400,000) $32,200,000 -188.46% -12.50%
CH Energy Group ($19,129,000) $12,818,000 ($51,522,000) $25,087,000 -148.69% -231.15%
Energy West ($1,451,146) $6,663,703 ($3,678,000) $1,567,451 -142.62% -208.01%
Florida Public Utilities ($2,228,000) $6,974,000 ($2,214,000) $1,393,000 -162.92% -162.52%
De lt a Nat ur al Gas $ 2, 034, 080 ($1,358,348) $6, 403 ,0 00 $ 1, 028, 864 -8 3. 93% - 49. 42 %
Southwest Gas ($56,745,000) ($63,971,000) $6,936,000 ($469,000) -106.76% -99.17%
Chesapeake Utilities ($19,719,672) ($18,728,830) ($5,595,000) ($2,213,456) -60.44% -88.78%
RGC Resources ($1,913,105) $2,481,460 $617,000 ($6,319,504) -1124.23% 230.33%
Central Vermont ($12,289,000) $6,665,000 $10,429,000 ($8,435,000) -180.88% -31.36%
Laclede $42,834,000 ($71,682,000) $22,421,000 ($20,089,000) -189.60% -146.90%
Hawaiian Electric
Industries Inc. ($5,237,000) $75,523,000 ($1,056,000) ($24,127,000) 2184.75% 360.70%
MGE Energy ($32,394,000) $8,464,000 ($59,672,000) ($31,065,000) -47.94% -4.10%
South Jersey Industries ($53,580,000) ($44,603,000) $92,307,000 ($35,583,000) -138.55% -33.59%
Mirant ($489,000,000) $4,000,000 $226,000,000 ($54,000,000) -123.89% -88.96%
El Paso Electric $2,439,000 $97,214,000 ($14,678,000) ($54,745,000) 272.97% -2344.57%
Northweste rn Corp. $65,723,000 $64,032,000 ($56,377,000) ($69,277,000) 22.88% -205.41%
Unisource Energy $70,455,000 $44,398,000 $77,400,000 ($72,278,000) -193.38% -202.59%
WGL Holdings ($25,961,000) $53,541,000 $48,767,000 ($72,999,000) -249.69% 181.19%
UIL Holdings $26,655,000 ($29,641,000) ($143,583,000) ($73,425,000) -48.86% -375.46%
Southern Union ($61,084,000) $110,909,000 ($146,475,000) ($101,784,000) -30.51% 66.63%
IdaCorp ($31,818,000) ($55,270,000) ($207,150,000) ($107,031,000) -48.33% 236.39%
Avista Corp. ($89,124,000) $36,381,000 $42,550,000 ($107,320,000) -352.22% 20.42%
Piedmont Natural Gas ($8,031,000) ($100,303,000) $98,270,000 ($111,799,000) -213.77% 1292.09%
Williams Companies $150,900,000 ($619,600,000) ($579,000,000) ($120,000,000) -79.27% -179.52%
Empire District
Electric Co. $5,533,000 ($152,028,000) ($79,728,000) ($120,288,000) 50.87% -2274.01%
Pinnacle West $96,764,000 ($344,277,000) ($260,645,000) ($122,009,000) -53.19% -226.09%
Reliant Resources ($999,459,000) $1,179,080,000 $642,887,000 ($127,767,000) -119.87% -87.22%
Allegheny Energy $179,659,000 $315,779,000 $146,662,000 ($132,700,000) -190.48% -173.86%
AGL Resources Inc. ($187,000,000) $101,000,000 $117,000,000 ($145,000,000) -223.93% -22.46%
Allete (Minnesota Power) ($5,100,000) $40,200,000 ($87,100,000) ($149,000,000) 71.07% 2821.57%
Otter Tail Corp. $35,831,000 $10,798,000 ($77,173,000) ($154,567,000) 100.29% -531.38%
Centerpoint Energy ($592,000,000) ($16,000,000) ($340,000,000) ($169,000,000) -50.29% -71.45%
Black Hills $38,570,000 ($48,755,000) ($9,292,000) ($183,281,000) 1872.46% -575.19%
Portland
General Electric $117,000,000 ($265,000,000) ($111,000,000) ($200,000,000) 80.18% -270.94%
TECO Energy ($118,200,000) $111,200,000 $59,600,000 ($201,700,000) -438.42% 70.64%
CMS Energy $53,000,000 $18,000,000 ($1,236,000,000) ($233,000,000) -81.15% -539.62%
CLECO $90,338,000 ($145,052,000) ($247,167,000) ($246,231,000) -0.38% -372.57%
PNM Resources ($11,706,000) ($76,694,000) ($178,370,000) ($256,854,000) 44.00% 2094.21%
Nicor Inc. $4,300,000 $259,600,000 $79,000,000 ($277,300,000) -451.01% -6548.84%
Integrys Energy ($324,500,000) ($264,600,000) ($138,400,000) ($282,800,000) 104.34% -12.85%
Atmos $53,761,000 ($113,875,000) $154,660,000 ($291,942,000) -288.76% -643.04%
Dynegy ($
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