Recently in Utility strategy Category

Pacific Gas and Electric is the classic, longtime "clean" utility -- almost no pollutant emissions. It just this week pulled out of the US Chamber of Commerce because of the chamber's tough skepticism about the need to regulate carbon emissions. But clearly, CEO Peter Darbee doesn't see company cleanness as any guarantee of future viability of a power utility.

Speaking at the Bank of America/Merrill Lynch utility conference in New York Tuesday, Darbee said climate change and renewable energy mandates are not the big challenges for the power industry. Instead, our correspondent Ethan Howland reports, he said distributed energy and smart meters present the much bigger threat to a business's way of life.

Sell me light-hours, cooling hours and water-heating hours. But don't sell me kilowatt-hours. If I took Peter Fox-Penner's advice, that's what I would tell my electric company.

And if utilities took his advice, that's what they would do. Roger Sant, who founded AES, proposed the idea in 1980, Fox-Penner, of the Brattle Group, recalls in a paper, and Thomas Edison's business started out that way: as an energy services company. Only later did it switch to selling only the kilowatt-hours, and leaving the electric appliances to others.

In 1980, the time was not right. But Fox-Penner sees its moment coming.

PSEG Group's chief executive, Ralph Izzo, persists in his belief that an electric utility can be something different from what it's been before. Whether he succeeds in persuading New Jersey regulators and policymakers that his newest idea deserves backing, who knows? But it's pretty inviting at first blush.

Don't leave it to me, the homeowner, to get around to replacing my refrigerator and my air conditioner, my light bulbs and everything else with more efficient ones, Izzo proposes. Make it the utility's job, the utility's business.

Affordable solar roofs, windmills that fit in neighborhoods or large yards ... other distributed energy sources that may come down in price. These could make real inroads on utilities' traditional business if the technologies really take hold as some inventors and visionaries dream. Combined with truly interactive smart grid developments, these things would change the nature of utilities. Improbable right now, the idea is nevertheless intriguing, and one blogger makes an interesting suggestion for the business model if the time comes: Utilities could be like banks. But cool, in a geeky, IT-genius kind of way.

The Obama administration is well past its transition period, and -- in case anyone missed the news earlier this week -- the Edison Electric Institute is making a transition of its own.

One might have thought EEI at something of a disadvantage in this super-Democratic administration and Congress. Longtime EEI President Tom Kuhn was a big Bush backer, a "Pioneer" who raised at least $100,000 for George W. Bush. But EEI, facing what Kuhn accurately called "a time of virtually unprecedented challenge and opportunity," has made what might be a really brilliant move. It has brought on board someone from the really very close-in ranks of House Democratic leadership.

As federal lawmakers and policymakers ratchet up the rhetoric on federal authority over states, state interests are struggling with what, if anything, to try doing about it.

"Trump" is one of those words to be avoided, generally, in negotiations. But Senate Majority Leader Harry Reid used it Monday in talking about federal versus state authority to site transmission lines. Referring to state utility regulators' opposition to federal preemption of that authority, Reid said, "Whatever we pass at the federal level trumps all that." Then there's also the federal stimulus bill's prescription for state regulatory action to remove utilities' disincentives to take energy efficiency action. And there's the prospect that the same kind of provision could be in legislation requiring deployment of renewable power.

Charles Gray, executive director of the National Association of Regulatory Utility Commissioners, suggested Tuesday that all this activity is regulated utilities' way of getting some things done that states simply have not done.

Carbon capture and sequestration, i.e. clean coal: reality, many say. If so, when? An American Electric Power executive got a bit of questioning today in Houston about that.

AEP is burning coal at a 20-MW pilot facility in West Virginia, and capturing the carbon dioxide with a chilled ammonia process, then burying it on site. The next step, said Nick Akins, executive vice president of generation, is to bump up the generation capacity to 235 MW in 2011 or 2012. CCS will probably be widely deployed after 2020, he told the McCloskey coal conference associated with Cambridge Energy Research Associates' enormous annual conference.

But he got questions about that 2020 date.

A strategy for some companies looking ahead to a nearly certain CO2 allowance market: Buy now, in whatever markets exist now, and bank them for use in the national CO2 program that is eventually established. Ameren, a totally Midwestern utility, is doing that in part by buying allowances in the totally Northeastern CO2 allowance program.

The company's strategy is "acting early, and buying a number of options now that we think will count," Ameren's James Moore said at a Platts carbon trading conference in Houston. One of the things the company is buying, he said, are allowances in the Regional Greenhouse Gas Initiative, where power generators in the 10-state Northeastern region have to cover their emissions. Assuming the allowances are good anywhere in the future, buying now is a good deal. RGGI allowances are selling in the $3 to $4 range. Forecasts for national allowance prices go from $10 to $25 and up.

Is something good unraveling or is something good just beginning? The question arises when looking at Maine, where the Public Utilities Commission has proposed letting groups of customers own renewable power facilities.

The PUC is considering allowing up to 10 residential and business customers to share ownership of projects of up to 500 kW and participate in net metering with the local utility. Stringer Lisa Wood reports that the Governor's Office of Energy Independence and Security wants to expand the idea a lot; it would allow projects and net metering up to a cap of between 2 MW and 5 MW, and customers could share ownership across utility territories. The renewable source could be at the customers' site or elsewhere. This is far from negligible.

Half of Americans view reducing climate change as extremely important or very important, according to one new survey. Sixty-one percent think companies should shoulder the costs of dealing with it. Only 16% think that products and services should cost more as a result. Most would be dissatisfied -- one third would be very dissatisfied -- if they had to pay a 10% higher utility bill to address climate change.

These figures come from a survey by EcoAlign, a "strategic marketing agency focused on energy and the environment." Its CEO is Jamie Wimberly, who some years ago was with the Consumer Energy Council of America.