OMPA transmission, 06/2013, v.29 no.6

              JUNE 2013 - VOL. 29 NO. 6
(Continued on page 2.)
by Paul Ring, Energy Choice Matters,
April 30, 2013
New England and New York could follow
California in essentially re-regulating new
build power generation through the use
of regulator-directed procurements,
Julien Dumoulin-Smith said in a note
to UBS Investment Research clients.
Dumoulin-Smith is executive director for
UBS' US Electric Utilities & IPPs Group.
"We believe the notion of competition for IPPs
is fundamentally shifting," Dumoulin-Smith
said in the research note titled "Evaluating
the Competitive Landscape," which cites the
potential for New England states and New
York to follow California into a long-term
procurement process for utility capacity and
generation needs.
With respect to retail, the note also cites a
trend toward re-regulation versus deregulation.
"With all of the discussion in recent years
around how to effectively incentivize new
capacity in merchant markets - and with
nearly every market now contemplating
a capacity-like mechanism - we see a
Shock: UBS sees New England, New York susceptible
to “re-regulation” of generation
fundamental re-evaluation as to the merits
and approach around 'restructuring' of power
generation. We believe regions that are truly
'committed' to deregulation warrant premium
cash flow multiples; while Texas (ERCOT)
stands out at the top of our list, PJM remains
near the top as well.
Meanwhile, we see cash flows produced
by IPPs in states such as California, New
York, and New England as more risky given
uncertainty around new supply - and possessing
less upside, as 'new entrant' economics appear
unlikely given states efforts to contract for
capacity needs well in advance of price signals,"
Dumoulin-Smith said.
"We believe states like New York could
eventually pursue more formulaic approaches to
the procurement of new capacity through efforts
akin to traditional 'Integrated Resource Plans'
filed by utilities in regulated states, rather
than the ad-hoc methodology pursued currently,"
UBS' research note says.
"What's next in the 're-regulation' of Generation?
Formally acknowledging such by regulators - as
has already been understood in California, where
the CPUC solicits for generation using a long-by
Paul Ring, Energy Choice Matters,
April 30, 2013
The trend in the retail electric sector
is, "towards re-regulation; not further
de-regulation," Julien Dumoulin-Smith said
in a note to UBS Investment Research clients.
Dumoulin-Smith is executive director for
UBS' US Electric Utilities & IPPs Group.
"We think the trend is towards re-regulation;
not further de-regulation," Dumoulin-Smith
said in the research note titled "Evaluating
the Competitive Landscape."
"Retail growth is likely limited to existing
markets," Dumoulin-Smith said.
"While talk of 'expanding' retail
opportunities to market has persisted
since initial re-entrenchment in a decade
ago, we see little palatability of increasing
'caps' on switching in Michigan, California,
alongside a host of other potential markets,"
the research note said.
"Additionally, we believe the short tenor
of retail contracting for energy (typically
only up to 1-year) will only reiterate the need
for underlying capacity constructs to provide
revenue visibility and fuel diversity across the
grid desired by power generators and regulators
alike," Dumoulin-Smith said in the research
note.
(See related article on the left.)
UBS: Retail trend is
towards more re-regulation;
Not further deregulation
Growth of ‘distributed’ electricity generation
could transform utility systems
by Steven Schultz, May 6, 2013
The U.S. electric utility industry faces a
critical juncture as new technology and
declining prices allow a more "distributed"
system of small-scale generators, renewable
energy installations and energy-efficiency
strategies, according to a group of high-level
energy industry executives and regulators
who met at Princeton University recently.
"We have a monumental challenge," said Jon
Wellinghoff, chairman of the Federal Energy
Regulatory Commission, who participated in
the all-day meeting Friday, April 26. Citing
commentary by an analyst who warned
of a potential "train wreck" in the industry,
Wellinghoff outlined converging tends in which
technological advances are allowing consumers
and companies to take matters of reliability,
term procurement plan (LTPP). We believe
New England and New York could follow suit
eventually," Dumoulin-Smith wrote.