|
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>Dew Convergence</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 --></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>APRIL 1997</u><br>
</b></p>
<p><font size="6"><strong>DEW CONVERGENCE</strong></font></p>
<p><strong>by Roger Feldman -- Bingham, Dana and Gould, P.C.<br>
</strong><font face="Arial" size="2">(<em>originally published by PMA OnLine Magazine:
04/98</em>)</font></p>
<p> </p>
<p><font face="Arial">The news magazines are full of efforts to delineate cults from
faiths. In business we similarly seek to sort out "fads" from
"trends." In the energy business, we are constantly required to make this
distinction at two continually interacting levels: economic/regulatory formulations
("public policy") and strategic corporate responses ("business
planning").</font></p>
<p><font face="Arial">Currently, the deregulating electric power industry is sorting out
the public policy and business planning ramifications of "convergence" - the
interplay at the end use customer level of multiple end use services. Already put in play
has been the convergence of electricity and natural gas. The connections in that context
are readily apparent: alternative energy sources; deregulated trading possibilities;
shared savings possibilities through energy service companies. Convergence has emerged as
a national strategy of some firms for leapfrogging markets and a defensive strategy to, in
effect, create regional energy fortresses. In short, the institutionalization in modern,
electronic based form of the combination company, has clearly graduated to the trend
stage. As pointed out in an earlier "viewpoint," the regulators have yet to
catch up and the federal legislators remain too embroiled in the electric wars.</font></p>
<p><font face="Arial">Following behind gas-electric convergence has been the potential
assimilation by the electric power industry of telecom applications-physical asset usage
(e.g. PCS) new services based on access to end use customers; hybrid IT - electric power
products. Clearly present, but harder to conceptualize because telecom deregulation - with
its strong technological driven - and power deregulation - still principally economically
based - present greater strategic difficulties. Nevertheless, in the telecom deregulation
bill, Congress drove a greater hole in PUHCA for telecom-power convergence by regulated
companies than it ever has been willing to permit in the gas-electric context. In short
convergence with more wizardry, but not therefore dismissible as a new cult.</font></p>
<p><font face="Arial">Enter now a sinister sounding combination: electricity and water.
The latter, in may way the last relatively untouched relic of the pre-competitive era of
regulated natural monopolies. What logic in fleeing from the rigors of deregulation to
what traditionally has been the "backwater" (a pun") of regulated industry?
Nostalgia? Fear of competition? Cult tendencies?</font></p>
<p><font face="Arial">And yet, like the first drops of rain on a windshield that presage a
storm, more and more instances of aqua/power have begun to emerge. As with power
deregulation, the first landmark signs are from the U.K. North West Water executed a $2.9
billion merger with Norweb, an electricity company. Welsh Water followed South Wales
Electricity plc. Enron forms a special subsidiary to commoditize water use. Jacek Makowski
reemerges from IPPdom as (modest corporate sobriquet) Poseidon. Smaller utilities begin to
play "pac man" with smaller water companies, e.g. NIPSCO, (IWC Resources)
Minnesota Power. In the US. power producers joint venture with affiliates of English
deregulated water companies, e.g. Ogden Yorkshire. Giant European utilities begin to
straddle both fields in the Western hemisphere, e.g. Compagnie Generale des Eaux.
Globally, its French rival Lyonnaise des Eaux appears to be pursuing a similar route.
Utilities and sophisticated automatic meter reading companies create strategic alliances.
The interplay of water and energy management and conservation begins to be
institutionalized. Power plays into the water business begin to look less like an awkward
lumber and more like a strategic lunge.</font></p>
<p><font face="Arial">What is the significance of the broadening ripples of convergence,
now reaching water, caused when the regulators threw the rock of deregulation into the
once turgid regulatory pool? Not, I would suggest, the creation of a mere cult. Rather, a
signal to those who would play in the private power deregulated market that there are more
options to think about than becoming just another power merchant on the block. Innovation
to exploit the general regulatory trend toward introduction of competitive flexibility may
be a key business strategy for nimble, high intellectual capital firms, whether private or
part of unregulated holding companies. Because today’s apparent lack of orthodoxy in
thought could well become part of tomorrow’s differentiating and even strategically
necessary strategy.</font></p>
<p><font face="Arial">In sum, "dew convergence" is a phenomenon not just for a
few extra-capitalized firms. It is a challenge and opportunity for that segment of the
private power industry which seeks to benefit from rather than be submerged by
convergence. Whether the logic is similar developmental skillset requirements or analogous
traditional utility regulatory characteristics, private power should recognize that if
they cast their electric cord upon the water, it may be returned many fold. I look for
legislators to recognize and be supportive of this form of cumulative deregulation through
convergence. Perhaps it will even find its way into pending federal legislation.</font></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="9704flmn.htm#top"><img src="../images/b-t-top.gif" alt="Back To Top" border="0" WIDTH="71" HEIGHT="35"></a></p>
</body>
</html>