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<title>Top Ten Predictions for the Twentieth's Finale</title>
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<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>
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<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>January 1999</u><br>
</b></p>
<b><font FACE="Palatino" SIZE="5"><p></font><font face="Arial" size="6">TOP TEN
PREDICTIONS FOR THE TWENTIETH'S FINALE</font></b></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:
01/99</em>)</font></p>
<font FACE="Palatino" SIZE="2"><p ALIGN="JUSTIFY"></font><font face="Arial"> </font></p>
<p ALIGN="JUSTIFY"><font face="Arial">Every December (beginning this year), the Editors of
this publication, well aware that its punditry moves markets, asks me to review the public
predictions for the following year (even balance of century) of leading consulting firms,
industry publications and trade associations, and on that basis make my own fearless
flawed forecasts. My task is made easier by the fact that other predictions are prepared
in November and so frequently are discernibly out-of-date by the end of December. While
one leading consulting firm was willing to review its own predictions for 1998, I will
never do that; that firm’s apologies for prior inaccuracies were as out of date by
publication as its forward-looking insights.</font></p>
<p ALIGN="JUSTIFY"><font face="Arial">Here then are my top ten predictions for the power
industry in the Twentieth Century:</font></p>
<p ALIGN="JUSTIFY"><font face="Arial">1. There will be no more than ten transmission
entities in the United States. They will be for-profit. They will cover entire swathes of
regions. Half of them will be foreign-owned. Open access will be mandatory. </font></p>
<p ALIGN="JUSTIFY"><font face="Arial">FERC will be compelled to establish focused and
precise regulation to govern interconnection costs; costs of transmission upgrade pricing;
and inter-market congestion pricing.</font></p>
<p ALIGN="JUSTIFY"><font face="Arial">This will happen whether or not there is
comprehensive Federal legislation. That legislation will be a long time coming.</font></p>
<p ALIGN="JUSTIFY"><font face="Arial">2. There will be no more than ten major power
suppliers, generally competing with each other in several of the major regional markets.
Each will formally or informally be linked with a major fuel supply provider. Each will
have power/fuel marketing capability.</font></p>
<p ALIGN="JUSTIFY"><font face="Arial">So far, you say, conventional wisdom. But read on .
. .</font></p>
<p ALIGN="JUSTIFY"><font face="Arial">3. The stranded cost dilemma will be recognized as
not reconcilable through the use of securitization. Resolution will become focused on the
dismantling of the nuclear power industry only. A package of incentive legislation will be
developed to enable private firms to acquire plants and sell energy, without bearing
decommissioning costs - which will become a wholly Federalized responsibility. Non-usage
related charges to bear a specified percentage of nuclear debt will be assessed on all
consumers.</font></p>
<p ALIGN="JUSTIFY"><font face="Arial">4. Public power will become an aggregation activity,
and municipalization (without stranded cost penalty) will become more common. Most public
power activities will become public-private joint ventures. Such ventures will become the
main market balance wheel, as aggregators gain the right to be the surrogates for retail
customers - even if there is never generalized retail access.</font></p>
<p ALIGN="JUSTIFY"><font face="Arial">5. Power commodity trading, including initiation and
new exchanges and rules regarding counterparty credit will become SEC jurisdictional
(since the SEC will have absorbed the CFTC and FERC Special Spike Task Force will have
been judged an unsatisfactory response to the challenge). 95% of power marketers will be
supplier or distributor owned.</font></p>
<p ALIGN="JUSTIFY"><font face="Arial">6. PUHCA will be repealed, separately and without
reference to comprehensive deregulation, because sufficient end user consumer protection
will be deemed to have been put in place. All entities engaged in power generation or
transmission will be subject to conventional SEC jurisdiction and an upgraded version of
DOJ regulation. The British will keep coming . . . the French and Germans, too.</font></p>
<p ALIGN="JUSTIFY"><font face="Arial">7. Profitability in the electric power industry will
dip. First the smaller generators, utilities and public power firms will be squeezed out.
Then independent power marketers and would-be smaller developers. The pace of mergers will
become frenetic</font></p>
<p ALIGN="JUSTIFY"><font face="Arial">. . . and then, surprise twist of fate . . .</font></p>
<p ALIGN="JUSTIFY"><font face="Arial">8. There will be a concern that the level of
potential technological innovation has not picked up as in telecom, that overall U.S.
dependence on less reliable foreign hydrocarbons is growing; that Euro pressure on global
warming is stepping up and</font></p>
<p ALIGN="JUSTIFY"><font face="Arial">(drum rolls)</font></p>
<p ALIGN="JUSTIFY"><font face="Arial">9. California will initiate an intense effort to
support dispersed generation and to intensify regulation beyond the Federal level;
followed by a Harvard study; followed by the resignation of Jesse Ventura as FERC
Chairman.</font></p>
<p ALIGN="JUSTIFY"><font face="Arial">10. Several leading prognosticators of the
energy/communication business will then suggest the probability of industry restructuring.
They will be wrong. The millenium will still end.</font></p>
<p ALIGN="JUSTIFY"><font face="Arial">Best wishes to all in 1999. Or as a leading
company’s President and COO recently comforted us, "This is a market for street
fighters".</font></p>
<p ALIGN="JUSTIFY"><font face="Arial">See you there.</font></p>
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<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>
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