|
Server : Apache/2.4.62 System : FreeBSD fbsdweb2.web.rcn.net 14.1-RELEASE FreeBSD 14.1-RELEASE releng/14.1-n267679-10e31f0946d8 GENERIC amd64 User : www ( 80) PHP Version : 8.3.8 Disable Function : NONE Directory : /domains/enrgy/feldman/ |
Upload File : |
<html>
<head>
<title>September 2000: Of Air and Power Rage</title>
</head>
<body style="font-family: Arial" vlink="#808080">
<div align="center"><center>
<table border="0" cellpadding="8" cellspacing="0" width="98%" bgcolor="#000000">
<tr>
<td width="100%" valign="middle"><a name="top"></a><img src="../images/pmamagsm.gif" alt="PMA Online Magazine" border="0" align="right" WIDTH="229" HEIGHT="100"></td>
</tr>
</table>
</center></div><div align="center"><center>
<table border="0" cellpadding="8" width="98%">
<tr>
<td width="25%" valign="top" align="center">
<!--webbot bot="Include" U-Include="wv_sidebar.htm" TAG="BODY" startspan -->
<table border="0" cellpadding="8" width="98%" id="table1">
<tr>
<td width="25%" valign="top" align="center"><map name="FPMap0_I1">
<area href="http://www.powermarketers.com/adrates.html" shape="rect" coords="14, 297, 97, 322">
<area href="http://www.powermarketers.com/pmajobs.htm" shape="rect" coords="11, 230, 95, 257">
<area href="http://www.powermarketers.com/main.htm" target="_parent" shape="rect" coords="12, 163, 96, 189">
<area href="http://www.powermarketers.com/power2.htm" target="_blank" shape="rect" coords="12, 95, 96, 121">
<area href="../pmamag.htm" shape="rect" coords="11, 29, 96, 54"></map>
<img rectangle="(12,163) (96,189) http://www.powermarketers.com/main.htm##_parent" rectangle="(12,95) (96,121) http://www.powermarketers.com/power2.htm##_blank" rectangle="(11,29) (96,54) ../pmamag.htm" src="../images/magmenu.gif" alt="PMA OnLine Magazine Menu" border="0" align="center" usemap="#FPMap0_I1" width="110" height="350"><p>
<a href="../searchpma.htm">
<img src="../images/archives.gif" alt="Archives Search" border="0" align="center" WIDTH="70" HEIGHT="40"></a></p>
<p align="left"><font face="Arial"><strong><small>About The Author:<br>
<br>
</small></strong><span lang="X-NONE" style="color: black"><font size="2">
ROGER FELDMAN, Co-Chair of Andrews Kurth LLP Climate Change and Carbon
Markets Group has practiced law related to the finance of environmental and
energy projects and companies for 40 years. In particular, he has analyzed
and executed a wide variety and substantial value of project financings. He
chairs the American Bar Association’s Committee on Carbon Trading and
Finance, serves on the Board of the American Council for Renewable Energy,
and has been a senior official in the Federal Energy Administration. He is
a graduate of Brown University, Yale Law School and Harvard Business School.</font></span></font></p>
<p class="BodyText05DS" align="left" style="text-align:left"> </p>
<p> </p>
<p> </p>
<p> </p>
<p> </p>
<p> </p>
<p> </p>
<p> </p>
<p> </p>
<p> </p>
<p> </p>
<p> </p>
<p> </p>
<p> </p>
<p><a href="#top">
<img src="../images/b-t-top.gif" alt="Back To Top" border="0" WIDTH="71" HEIGHT="35"></a></td>
</tr>
</table>
<!--webbot bot="Include" i-checksum="19883" endspan --><p> </td>
<td width="75%" valign="top"><img src="../images/feldman.gif" alt="Washington Viewpoint by Roger Feldman" border="0" WIDTH="375" HEIGHT="75"><p><b><u>September
2000</u><br>
</b></p>
<p><b><font face="Arial" size="6">Of Air and Power Rage</font></b></p>
<p><strong>by Roger Feldman -- Bingham, Dana L.L.P.<br>
</strong><font face="Arial" size="2">(<em>originally published by PMA OnLine Magazine:
2000/10</em>)<br>
</font></p>
<p ALIGN="JUSTIFY">It was the summer where people packed the airplanes;
stifled, simmered and suffered; applauded humorists who mocked their fate
and their "captors"; and began to mull seriously news magazine
columnists’ suggestion that airline deregulation should give way to
public-private partnerships When prices went up in a devilishly targeted
manner, mega- mergers were proposed to achieve efficiency; regulators were
mocked for their inefficacy in providing computerized management systems
up-dated to correspond to service levels; the weather was blamed for
everything, and economists celebrated whole thing as the triumph of
deregulation. After all, there <u>was</u> more travel and per unit it was
more efficient. It was the summer of air rage.</p>
<p ALIGN="JUSTIFY">This, of course would never happen in the electric
power/natural gas industry. It was the summer when shortages were most
pronounced in the regions where deregulation had first occurred. Where
regulators turned to price caps to deal with spikes in power prices; when
the AGA dusted off its explanation for gas price uses and inventory
declines (prices it seems had been too low and inventories too high to
stimulate needed search); and, above all, a summer when a new fear of
re-regulation stalked the private power industry. ("Deregulation
sucks" was the headline in a parched San Francisco newspaper). The
deregulated power supply industry’s trade association convened a major
war council to take the lead in developing a response to "spreading
consumer, political and regulatory concerns about power supply in certain
areas of the country." No power rage here.</p>
<p ALIGN="JUSTIFY">It was the summer before the election, and all of the
players responded to the crisis admirably. As the notion of comprehensive
legislation creaked futiley on, older rifle shot ideas - like mandatory
hard lending deregulation dates, resurfaced with a vengeance. In this
case, the vengeance (Sen. Schumer) was in part on the Governor (of New
York) who had administratively deregulated only to discover that
deregulation could lead to ongoing price escalation (of ConEdison) as real
wholesale prices became retail prices. Surely, however, someone wise
reasoned, Federally imposed deregulation would not have that effect in a
mandated deregulation quilt of fifty state colors... If Congress saw the
energy crisis as a football it chose not to touch in an election year,
Chairman Greenspan, unhampered by that constraint, did not feel so
encumbered. Atlas shrugged (oblivious to the facts it might appear) that
Congressional inaction on deregulation was making the needs for new
powerplants unclear; that there was a disincentivization to construction;
and that instability in the economy therefore might result. One takes
comfort in knowing that he clearly believes that price increases and other
power industry perturbations don’t reflect the increase in natural gas
prices and will not be impacted in the future at a time when the new fleet
of plants being built turns out to be all combined cycle gas. Greenspan
reassured us that it takes a while to get the wells in place and bring up
the level of inventories of natural gas. That laugh track you hear in the
background is courtesy of OPEC, by the way folks.</p>
<p ALIGN="JUSTIFY">Well, at least Greenspan was keeping his eye on that
old economy supply-demand thing. That’s better than in strife-form
California, as PG&E prepared to consummate the State’s successful
deregulation by auctioning off its huge, non polluting successful hydro
system. Two Green powers clashed over this proposition. Each, however,
promised to downward tilt the supply half of the power equation: Sierra
Green wants the dams busted so the salmon can swim freely and multiply;
Dollar Green wants to fragment the PG&E ownership thereby maximizing
the optionality of individual sites, without reference to what that does
to the productivity of the system. Even (Sen.) Pease, the deregulation
sponsor, is now breaking out in hives and publicly suggesting that maybe
his baby was Rosemary’s. No power rage here.</p>
<p ALIGN="JUSTIFY">Fortunately, our national leaders – at least, our
presidential candidates – have clear fixes in mind to fill the vacuum of
Congressional inactivity and State political paralysis. "W"’s
presumptive Secretary of Energy and Commerce, Ken Lay, told Congress to
get cracking on deregulation (presumably in a manner which was
conservatively compassionate and conducive to large volumes of trading of
energy commodities). To hedge his bets, Secretary Presumptive also
announced his deal with Blockbuster, as well as his new energy marketing
joint venture with AOL and IBM. His top corporate aide assured us all that
more power plants were on the way and all would then be well. Vice
President Gore brought a whiff of ‘60’s eco-incense and ‘70’s
malaise to the debate, calling for billions of dollars in tax incentives
to promote new technologies, solar powered homes and cleaner running cars.
Comforted were we all to learn, that it was a timid old way of thinking to
trade off the economy and the environment (as to the latter of which his
commitment "has always run deeper than politics.")</p>
<p ALIGN="JUSTIFY">Yet, it was not yet a summer where energy rage joined
air rage, because we Americans have learned to deal with the depths of
inability of our leaders to lead and planners to plan. When supply and
demand are out of whack, while our public procurators posture, we
organize; we try to smooth imbalances by moving goods; we engage specific
new technologies to overcome the core of problems as well as the
discontents of consumers. The kinds of bright spots that will grow that
saw the light of day this summer:</p>
<blockquote>
<ul>
<li>
<p ALIGN="JUSTIFY">The City of Chicago (located in a spike impacted
region) joined with 47 other local governments to aggregate electric
power loads, in order to seek cheaper power in the competitive
market. It was advantage of the first opportunity since its State
deregulation to pursue that route. An RFP was issued with a 20%
mandatory renewable resource component.<br>
</li>
<li>
<p ALIGN="JUSTIFY">Plans for a major B2B transmission exchange were
unveiled by AEP, CP&L, Duke and Unicom allowing those seeking to
reserve and schedule transmission capacity to consolidate
transactions they currently make on 2 or more OASIS sites. A
regional exchange in the Carolinas was announced hard on its heels.<br>
</li>
<li>
<p ALIGN="JUSTIFY">Otter Tail Power (which you may know better as
the owners of the Fargo Red Hawks – it pays to diversify)
introduced new real time load management software which allows the
customer to reduce consumption during critical price event periods,
and by thereby creating negawatts become a resource to the network.</li>
</ul>
</blockquote>
<p ALIGN="JUSTIFY">Ward Uggerud, energy supply officer and lead developer
of the technology captured the spirit of all of these innovations –
which we can only hope will percolate upwards and color the
regulation/deregulation energy debate which has gridlocked Washington:
"I have spent my entire career..dealing with our load control area…
The philosophy behind the (customer choice) technology is to take and
expand those things that load control areas do at the utility level and
make them available at a retail customer level."</p>
<p ALIGN="JUSTIFY">So as we leave the summer furnace and look past the
election, we are left with the hope that Air Rage will not give way to any
Power Rage (other than the election), because America’s market
adaptation instincts – as distinguished from Washington’s formulaic
recitation of adherence to market based principles without notice of
mundane consequences – can prevail within a workable time period.</p>
<!--webbot bot="Include" U-Include="wv_bottom.htm" TAG="BODY" startspan -->
<hr color="#FFFF00">
<p class="MsoBodyText" align="left" style="margin-bottom:0in;margin-bottom:.0001pt;
text-align:left"><font face="Arial" size="2">
<span lang="X-NONE" style="color: black">ROGER FELDMAN, Co-Chair of Andrews
Kurth LLP Climate Change and Carbon Markets Group has practiced law related
to the finance of environmental and energy projects and companies for 40
years. In particular, he has analyzed and executed a wide variety and
substantial value of project financings. He chairs the American Bar
Association’s Committee on Carbon Trading and Finance, serves on the Board
of the American Council for Renewable Energy, and has been a senior official
in the Federal Energy Administration. He is a graduate of Brown University,
Yale Law School and Harvard Business School.</span></font></p>
<!--webbot bot="Include" i-checksum="63395" endspan --></td>
</tr>
</table>
</center></div>
<p align="center"><a href="#top"><img src="../images/b-t-top.gif" alt="Back To Top" border="0" WIDTH="71" HEIGHT="35"></a></p>
</body>
</html>