Guest Editor's Note

The title of this year's Global Powers Markets conference is "Meeting the Challenges of Growth." Those challenges can be summed up by three Cs: Climate, consolidation and competition.

The concern about climate change has gone from a debate to a political reality. California has passed legislation to limit and reduce greenhouse gas emissions, and several states are looking to follow California's lead. Already 13 states have greenhouse emissions targets, and five states have carbon cap or offset requirements for power plants.

In addition, it is likely that environmental groups will feel emboldened by the fact that the private equity group that has proposed the $45 billion buyout of TXU has given Environmental Defense and the Natural Resources Defense Council a seat at the table. At the very least, climate change concerns cannot be left out of the equation when building a power plant, whether it is fired by natural gas or by coal or is powered by wind, water or sun.

Meanwhile, in Virginia, the state legislature has approved a bill that would return the state to a ratebase regulatory framework. Competition is also under fire in Illinois and Montana and even the Electricity Consumers Resource Council, which has been at the forefront of the battle for competitive markets, is having second thoughts, as can be seen in ELCON's contribution to this edition of Insight.

The final "C" is consolidation. Smaller companies are selling out to bigger ones, or being bought out. New players are emerging by combining assets, and even large companies, such as TXU, have become targets of the voracious appetite of investors seeking ever higher returns.

What effect will this have on competition? It may be too early for a full reckoning, but at least one state, Texas, believes that size matters and is considering legislation that would impose stricter limits on the size of market players within the Electric Reliability Council of Texas region.

The interesting point is that these three challenges are coming together. Climate change is being discussed at the same table as consolidation. Consolidation is prompting discussions about competition, and competitive forces are putting pressure on companies to consolidate. This issue of Insight puts together a distinguished panel of contributors who explore various aspects of these concerns. Taken together, they could help a company chart a path through the challenges toward growth.

Peter Maloney

Chief Editor, Platts Global Power Report

Peter Maloney