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It’s been a while since my last post.  However, this article was too good not to share.   For those familiar with the utility space, unlike competitive firms, a utility’s authorized earnings (i.e., rate base times rate of return) are an input in determining rates rather than the result of net revenues exceeding operating expenses.  Rate base growth, thus, is the key read more…

In a prior blog, I observed that EPA’s “go-it-alone” policies to force carbon emission reductions from existing power plants would likely have untended consequences, such as less reliable, less affordable electricity.  I also questioned EPA’s reliance on nascent carbon capture technology to bolster its claim that many existing plants can remain in operation.   These concerns were affirmed in the comments read more…

Regulation plays an important role in determining the cost and quality of utility services. Thus, participating in the regulatory process is an essential strategy for pro-actively managing your company’s electricity and natural gas costs.  All regulatory commissions determine: (1) the utility’s overall revenue requirement or cost of service to provide the utility a reasonable opportunity to earn a reasonable return read more…

In last week’s blog, I reported that the EPA had proposed a rule requiring the use of carbon capture and hydrogen for new and existing power plants.  I also observed that neither technology has yet to be successfully deployed at scale, and neither can be characterized as the best available technology.  If adopted, the proposed rule would make it all read more…

With the recent harsh winter storm disruptions in its rear-view mirror, NERC issued its first ever top-level call to action on winter reliability (see article 1 below).  This level 3 action (the highest alert level) calls on generation and transmission owners to report their winter weatherization plans by October 6.  With the continued retirement of dispatchable generation, it is no read more…

Continuing from my last post regarding poor governance, both the EPA and Federal Appeals Court have taken recent actions that will affect grid reliability and future electricity costs.   With respect to the EPA, on April 5, the EPA moved to strengthen a mercury pollution rule for coal-fired power plants on the assumption that the vast majority of affected generators are read more…

It is unfortunate, if not shameful, that an important government agency is implementing rules that could seriously compromise the reliability of the electricity grid.  Yet, it is clear that EPA considered only the improvement in air quality and ignored the downstream impact of its “Good Neighbor” rule — higher costs and diminished reliability of electricity – in determining that the read more…

The Inflation Reduction Act (IRA) is frequently cited for the proposition that renewable energy resources will become more competitive with traditional generating plant technologies.  However, it may come as a surprise that researchers are now claiming that renewables are more economical than all (but 1) of the remaining coal plants.   This is the conclusion of the just released Coal Cost read more…

This should be yet another wake-up call that the more rapid retirement of generation capacity is placing pressure on system operators’ ability to keep the lights on, particularly during more stressful periods.   MISO is not the only region facing an imminent threat.   MISO facing increasingly thin reserve margins due to plant retirements – NERC EXTRA Thursday, December 15, 2022 3:24 PM read more…

All is not well in “Grid-Land.”  The NYISO and MISO have recently issued warnings about the challenges to maintaining a reliable system in meeting decarbonization mandates (see the S&P articles below).  Especially concerning is that mandates are accelerating the retirement of older fossil-fuel units that the RTOs say are needed to avert capacity shortages.  More concerning is the growing reality read more…