[en] What are the factors and circumstances that have made some plants more valuable to others than to their original owners? What is currently keeping nuclear plants, with their relatively low operating cost and environmental impacts, at the bottom of the heap? Why will some nuclear plants have significantly higher market values in the future while others will fail? What circumstances are likely to change in the near future that could significantly alter this market? In this article, the authors address these questions and attempt to provide insights into the unique market for nuclear power. The authors will proceed by first introducing the components of generation asset valuation, then discussing recent experiences with the sales of non-nuclear and nuclear power plants. Next, the authors will provide some explanation for why non-nuclear assets are enjoying a robust market while the market for nuclear plants remains immature. Finally, the authors present an analysis of the future value of nuclear power and a view of one road to take to get there

[en] Most of the concerns about physical transmission rights relate to the ability to implicitly or explicitly remove that transmission capacity from the market-place. Under a very strict form of physical right, owners could simply choose not to sell it if they don't want to use it. Modifications that require the release of spare capacity back into an open market could potentially alleviate this problem but there is concern that such releases would not occur far enough in advance to be of much use to schedulers. Similarly, the transmission capacity that is made available for use by non-rights holders can also be manipulated by the owners of transmission rights. The alternative form, financial transmission rights, provide to their owners congestion payments, but physical control of transmission paths. In electricity markets such as California's, even financial transmission rights could potentially be utilized to effectively withhold transmission capacity from the marketplace. However, methods for withholding transmission capacity are somewhat more convoluted, and probably more difficult, for owners of financial rights than for owners of physical rights. In this article, the author discusses some of the potential concerns over transmission rights and their use for the exercise of various forms of market power

[en] Blind faith is unlikely to produce a free market that is competitive. Substituting markets for traditional regulation is only one choice among many policy instruments to achieve a goal of lower prices; such substitution should not be in itself a goal. (author)

[en] Consideration of environmental externalities is becoming an increasingly important factor in the selection of new electricity generation capacity. A recent survey showed that 17 state public utility commissions had instituted or are developing rules addressing environmental externalities as of mid-1991. In general, these rules require electric utilities to consider the externality costs of environmental emissions as well as traditional economic costs when evaluating resources as part of an integrated resource or least-cost plan. This article reposts on a computer simulation model used to examine the potential impact of the adoption of environmental externalities in utility planning. The model, FOSSIL2, is a national energy model that is used by the Department of Energy as part of the National Energy Strategy (NES). FOSSIL2 is a useful model for examining the consequences of internalizing environmental externality costs because it explicitly simulates investment in new electric capacity, capital stock turnover, and electricity rates

[en] Although activity quintupled to 1.2 billion megawatt-hours in 1997, many electric industry participants still have only a vague idea of what the identity and role of power marketers are. Like the independent power producers before them, however, they should no longer be regarded merely as marginal side players. This article attempts to explain what power marketing is, who power marketers are, what they do, why they do it, and what is behind their explosive growth in the past few years. This article also explains what types of products and services they offer, why these products and services are in demand, and what are the fundamental drivers for this demand. Understanding the last item is particularly significant; namely, the rapid restructuring of the wholesale--soon to be followed by the retail--electricity markets in the United States. An equally important impetus for the industry's growth is the passage of the highly significant Energy Policy Act in 1992 and, more recently, the promulgation of Orders 888 and 889 of the Federal Energy Regulatory Commission (FERC) in 1996. In the absence of those, there would be no power marketing industry as it is known today

[en] The amount of generation capacity that must be installed to meet resource adequacy requirements often causes the energy market to be suppressed to the point that it fails to produce sufficient revenues to attract new entry. A significant expansion in the use of real-time pricing can, over time, cause the energy market to become a more bountiful source of revenues for generators, allowing the elimination of the capacity market. (author)

[en] There is value in DR, but it needs to be evaluated correctly. The pricing experiment in California showed that well-designed dynamic pricing programs can have a significant impact on critical peak loads, and California's investor-owned utilities are using the experimental results to develop business cases for advanced metering. A key question in developing these business cases is how much value to attach to a kW of load that is curtailed during critical times. (author)

[en] Should we as a society adopt policies to internalize external environmental costs? Of course we should. But we should do it correctly. State public utility commissions (PUCs) that are using numerical 'externality adders' reflecting global and regional environmental impacts in the resource planning and selection process are doing it wrong. The use of these adders is likely to lead to higher electricity prices without a commensurate improvement in environmental impacts in the resource planning and selection process are doing it wrong. The use of these adders is likely to lead to higher electricity prices without a commensurate improvement in environmental quality. Alternative approaches for dealing with environmental damages or externalities exist that can lead utilities to take account of the environmental costs associated with the generation of electricity more effectively and at lower cost. This article discusses what an externality is and why the use of environmental adders by PUCs in the resource selection process, while well intentioned, is a bad idea. The author discusses how the most egregious errors associated with the use of adders can be corrected if PUCs insist on using them. Finally, he outlines an alternative approach that state PUCs can pursue which will better serve the electricity customers they are supposed to protect and promote a cleaner environment at the lowest reasonable cost. The author emphasizes that this is not a debate about whether or not environmental costs should be factored into the investment and operating decisions of firms that produce pollution. Rather, it is about how it should be done and whether state PUCs are in a particularly good position to do it well, given their expertise, legal authorities, other responsibilities and scarce resources

[en] With compliance deadlines approaching in three years, utility, environmental and financial planners and their regulators are in the process of grappling with the requirements imposed, and opportunities created, by the acid rain program established under Title 4 of the Clean Air Act amendments of 1990. The novel element of the program - emissions or allowance trading through a nationwide allowance market - presents great challenges for utilities and their regulators. Perhaps the foremost challenge is establishing the allowance market. If state utility commissions subject utilities' compliance strategies to traditional after-the-fact prudence reviews, as tradition would impel them to do, the attendant regulatory risks are likely to push utilities toward more conservative compliance schemes that underuse allowance trading (as the exchange at the head of this article demonstrates). If that happens, the market will fail to develop, and its full potential for environmental benefit at least cost will go unrealized. This, in turn, is likely to strengthen the case for non-market regulatory mechanisms - a vicious circle. In this paper, the authors suggest a way out of this

[en] The next several years promise to bring changes in the structure of the electricity industry which will drive utilities away from capital-intensive options. The escalation in nuclear operating costs and the fall in fossil fuel prices could sharply alter the economics of older plants. The continued aging of nuclear plants could reveal additional problems and lead to additional regulation, thus forcing costs further upward. Taken together with the serious and unresolved problems of nuclear waste, the higher-than-expected operating cost of nuclear plants, and the erosion of the regulatory bargain, the future of nuclear power in the U.S. appears dim