Electricity

President Obama recently signed into law a landmark financial regulatory reform bill that has implications for every business in the country. Reforms involving financial derivatives trading, among other things, and how companies manage their risks, were the focus of the energy and manufacturing industries. The legislation’s effects on electricity suppliers and customers, and thereby infrastructure investments and electricity prices, gained particular attention with key legislators recognizing the need to maintain financial risk-hedging tools for electricity providers.
 

Clean energy generation has grown at a phenomenal pace in the PJM Interconnection market.  Data from PJM’s Environmental Information Services’ (EIS) tracking system shows that over the past five years, wind generation has increased almost 1,300 percent, from 500,000 megawatt-hours (MWh) in 2005 to 6,500,000 MWh in 2009. Solar power, which accounted for only 100 MWh in 2005, produced more than 81,000 MWh – a 3,000 percent increase.

This infusion of clean energy has reduced PJM’s carbon dioxide emissions per MWh of generation by 12 percent since 2005, created green jobs, and provided customers with low-carbon energy alternatives, according to the EIS data.

A key Arizona legislator is pressing to reopen the state’s electric markets to full competition in order to spur job growth, reduce emissions, encourage innovation and reduce costs for consumers. Representative Lucy Mason of Prescott, chair of the House Water and Energy Committee, recently held a legislative forum that cited a report by the Goldwater Institute to urge competition in the state’s electricity market.

The Goldwater Institute report, Opening the Grid: How to Recharge Arizona's Electricity System for the 21st Century, was authored by two respected economists and finds that electricity restructuring has been successful in Britain, Texas and Pennsylvania, and would work in Arizona if the state’s electricity market was open to competition.

Last week’s regular meeting of the Federal Energy Regulatory Commission featured a staff assessment of the outlook for energy markets this winter, including the “exciting” development that natural gas and electricity prices have fallen to their lowest levels since 2001. Forward prices for natural gas this winter are significantly lower than at this time last year, and gas was placed into storage earlier this year for consumption during peak demand winter months at an average price of $3.45, nearly a third of the $9.40 average cost last year, FERC staff reported.

Retail competition in Illinois has increased significantly since 2006, the Illinois Commerce Commission concluded in its Triennial Report on Retail and Wholesale Competition in the Illinois Electric Industry issued this week. During a transition period in the state, which ended in 2007, competition was largely confined to the largest commercial and industrial customers of the state’s two largest utilities, Commonwealth Edison and Ameren. The new data shows substantial numbers of medium and small non-residential customers switching to competitive power suppliers.

Nearly all (93%) of the largest commercial and industrial customers of both ComEd and Ameren are buying power in the competitive market. The Commission found that the level of switching activity is noticeably increasing for small and medium-sized customers — 55% of ComEd’s and 38% of Ameren’s customer load under 1 megawatt is provided by a competitive supplier.