Discussing Energy Economics on the Internet

USAEE 2009 – Thursday Evening

Posted in Climate,Conferences,Demand Management,Louisiana,Market Design by Cheryl Morgan on the December 4th, 2008

I caught a plenary session on demand management and renewables that was quite interesting. Brandi Colander of NRDC gave a lightning fast presentation on demand reduction starting from the fact that DR is apparently much cheaper than generation, but no one puts any money into it. There are many reasons for this, but one that I hadn’t thought of before is rental property. If a property is rented and the tenant pays the energy bills then the landlord has no incentive to improve the property, but if the landlord pays the energy bills then the tenant has no incentive to manage usage. Regulatory issues play a part too, and Brandi was very hot on the need to decouple utility profits from the process of selling more energy.

The session on restructured markets majored on issues regarding whether consumers are better off under deregulation. Jay Zarnikau revealed that in Texas prices had risen much more in the areas of retail competition than in areas where prices are still regulated, but the market is young and that could simply be a matter of private companies passing on costs more quickly than regulators. John Kelly of APPA claimed that prices in the PJM have risen much more sharply than prices in neighboring regulated states, but it is one thing to say that this has happened and another to prove that it is the result of anti-competitive behavior.

The Japanese are apparently worried about their nuclear industry because no one wants to work in it. This is a story that the UK can probably relate to.

The winner of the student paper contest was Derek M Lemoine from Berkeley for a paper using real options to value plug-in hybrid vehicles. Go Bears! (And yes, one of the other finalists was from Stanford.)

The after dinner speaker was Brent W. Dorsey, the Director of Corporate Environmental programs at Entergy. It is perhaps unsurprising that the company whose systems have been wrecked by hurricanes Rita, Katrina, Gustav and Ike believes in global warming, but it was still a pleasure to hear a senior utility executive not only say so, but quote The Onion to make his point. Of course Entergy’s money is not in the coal business, but Mr. Dorsey recognized the plight of his colleagues in the industry and made an impassioned plea for the US to become a world leader in technologies such as clean coal and carbon sequestration, which it could then export to China and India.

We have another full day of program tomorrow.

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Gustav Hits the Wires

Posted in Electricity Transmission,Louisiana by Cheryl Morgan on the September 3rd, 2008

Prior to Hurricane Gustav’s arrival in Louisiana, most of the energy-related discussion had been about oil & gas – the shut down of rigs and the threat to the transportation and refinery infrastructure. Although we seem to have been spared most of the feared problems, electricity transmission systems have been failing all over the state. Platts reports that almost half of the state’s customers were without power after the hurricane passed.

There are knock-on effects from that. Gas stations rely on having electricity to be able to operate pumps, so without electricity road transport is hobbled. The Seattle Times reports concerns over a dozen hospitals that are running off backup generators and urgently need fuel supplies. Patients are having to be airlifted out because the hospitals have no air conditioning. The availability of fresh water is probably also being affected by lack of electrical power. Governor Jindal has said that electricity supply is the single biggest issue in getting the state back on its feet.

Most of the electrical infrastructure in Louisiana is owned by Entergy, who say that 191 power lines and 210 substations are in need of repair. There are serious concerns about the stability of the system around New Orleans which has currently been isolated from the rest of the grid because so much of the connecting transmission is out of commission. Reuters has details.

Update: Platts now reports that 55%of Louisiana customers are without power, and that the hurricane has also caused significant outages in Mississippi and Arkansas.

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Louisiana Declares Energy Emergency

Posted in Louisiana,Retail by Cheryl Morgan on the August 13th, 2008

High oil and gas prices are forcing electricity prices up across the US. Now one state regulator has decided to take action. The Louisiana Public Service Commission has declared an “energy emergency”. Under a special state law, the PSC is able to make such declarations when it believes that utility bills are becoming too burdensome for citizens. The state’s four investor-owned electricity utilities will now be required to implement deferred payment plans for low-income customers to help ease the pain of rocketing bills. More details from Platts.

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