A bipartisan group of lawmakers this week introduced the Electric Drive Vehicle Deployment Act of 2010, aimed at propelling deployment of EVs and related infrastructure. The bill — sponsored by Senators Byron Dorgan (D-N.D.), Lamar Alexander (R-Tenn.) and Jeff Merkley (R-Ore.); and Representatives Ed Markey (D-Mass.), Judy Biggert (R-Ill.), Jerry McNerney (D-Calif.) and Anna Eshoo (D-Calif.) — proposes to earmark $800 million in grants to help five communities install charging stations and incentivize EV purchases. It also would extend existing federal tax credits for individuals buying EV and charging system purchases.

“The auto industry is moving quickly to meet customer demand for more efficient vehicles that cost less to fuel up,” stated Rep. Biggert. “But our electric transportation infrastructure must keep pace with the technology.”

The bill also would seek to establish “best practices” in deploying EV infrastructure across the country. The bill’s sponsors cited EVs’ prospects for reducing dependence on imported oil, and also cutting greenhouse gas emissions.

“The goal should be to electrify half of our cars and trucks within 20 years,” stated Sen. Alexander.-MTB

Posted: May 28th, 2010 under Uncategorized, climate change, electric vehicles, energy policy, smart charging.
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Weekly updates courtesy of Utility Regulatory News #3968

Although authorizing additional revenues of almost $3.5 million for a natural gas local distribution company, the Arizona Corporation Commission has instructed the company to provide supplemental funds for certain of its low-income ratepayer assistance plans, so as to mitigate the impact of the rate increase on its more vulnerable customers during the ongoing economic recession.

Citing the effects of a customer base that varies seasonally, and purporting to have experienced negative growth during the test period, the company, UNS Gas, had requested an increase of nearly $9.5 million and a rate of return on equity (ROE) of 11%. The company averred that the 11% ROE was reasonable given the business risks experienced by a group of comparable firms. The commission, however, deemed the company’s selected proxy group to be flawed in that it looked to the general business world rather than similarly situated utilities. The commission thus found the company’s risk assessment to have been overstated, noting that utility services are not discretionary for consumers and remain fairly stable even during economic downturns.

By the same token, the commission declared the company’s projected number of customers to have been understated. According to the commission, the company’s rate of growth may have slowed, but it was still growing nonetheless. The commission therefore settled on a 9.5% ROE for the company. Moreover, finding that customers with modest means have been more affected by the poor economy than has been the company, the commission ordered the company to 1) increase spending on various low-income weatherization initiatives; 2) add to its bill paying assistance funds; 3) increase the income eligibility level for certain programs; and 4) refrain from increasing the monthly customer charge for qualifying low-income plan participants. Subscribe to URN for the full story.

Posted: May 26th, 2010 under Uncategorized, natural gas, regulation.
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Weekly update courtesy of Utility Regulatory News #3868 …

The U.S. Court of Appeals for the District of Columbia Circuit has sustained two decisions from the Federal Energy Regulatory Commission (FERC) that had examined rate base and rate credit matters associated with a municipally owned electric transmission line that was interconnected with an investor-owned electric utility’s transmission network.

The line, owned by the Florida Municipal Power Agency (FMPA) and running a relatively short distance between Ft. Pierce and Vero Beach, interconnects with the far more expansive transmission facilities of Florida Power & Light Co. (FP&L). The municipal agency claimed that it was due certain rate credits from FP&L because the Ft. Pierce to Vero Beach line not only was critical to the agency’s provision of service to its own customers, but also benefitted FP&L  in its provision of service to the utility’s ratepayers. The agency pointed out that it was itself a customer of FP&L. The utility, however, refuted the notion that the municipal line was somehow necessary for the provision of service to FP&L customers, including FMPA.

FP&L argued that while the FMPA line was indeed interconnected with FP&L’s transmission lines, it was not fully integrated into its system, a conclusion with which the FERC had agreed. The FERC determined that two different tests of comparability, one conducted in 1994 and another in 2005, had yielded the same result, namely that the interconnection notwithstanding, the FMPA line was simply not needed by the utility for purposes of serving either FP&L’s local or remote loads.

Upon appeal by the FMPA, the court acknowledged that the two tests had not been run in an identical manner, but the court denied that the use of different approaches in any way negated or adversely impacted the test results. The court ruled that both reviews had upheld the FERC’s comparability standard for investor-owned versus customer-owned transmission facilities. Additionally, the court said that both tests had been targeted specifically at ascertaining what transmission facilities are required for serving FP&L’s own load, with the two tests producing consistent findings that the FMPA line doesn’t fit the description. Subscribe to URN for the full story.

Posted: May 26th, 2010 under transmission regulation.
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Weekly Update courtesy of Utility Regulatory News #3968 …

Finding that their operation within Iowa might violate state statutes giving regulated electric utilities exclusive service area rights, the Iowa Utilities Board has temporarily prohibited aggregators of retail customers (ARCs) from offering service in the state.

ARCs obtain the rights or options of retail electric consumers to purchase electricity at a certain regulated rate, with the ARCs then turning around and selling those options in the wholesale market. In the board’s view, ARCs essentially engage in arbitrage.

The board’s suspension directive came in response to an announcement from the Midwest Independent Transmission System Operator (MISO) that it was contemplating certain rule changes in order to accommodate demand resources bid by ARCs into wholesale energy markets. MISO explained that its move was in deference to FERC orders requiring regional transmission organizations to consider the efficacy of allowing ARCs to bid demand response measures into wholesale and ancillary services markets. Observing that Iowa never deregulated or pursued industry restructuring, the board expressed concern that ARC operations could interfere with those state laws granting exclusive territorial rights to electric utilities.

The board contended that other constitutional questions were raised as well, including the potential for discriminatory rate impacts on captive utility customers. Consequently, the board held that a moratorium on ARC operations should remain in place until such legal matters can be resolved. Subscribe to URN for the full story.

Posted: May 25th, 2010 under Uncategorized, regulation, retail competition.
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Today ABB announced it would pay $1 billion to acquire Ventyx from equity firm Vista Equity Partners (see press release below). The deal values Ventyx at a healthy 4-times earnings ($250 million). During a conference call, ABB executives emphasized the company’s growth potential and the greater reach Ventyx would give ABB into smart-grid related software markets, particularly in the United States.

ABB emphasized the complementary competencies and market positions of the two companies (see slide). ABB CEO Joe Hogan said the companies have almost no overlap in their businesses.

Hogan said the Ventyx acquisition will help ABB provide services in an under-served operational niche. “When you get into the nuts and bolts of utilities, which are areas we know well, companies like Oracle and SAP tend to have trouble,” Hogan said.

Interestingly executives made virtually no mention of Ventyx’s advisors group, which the company has been building for the past year. Lee Van Atta, a v.p. in the group, wrote “Gas Market Outlook” for Fortnightly’s April Energy Risk & Markets department.-MTB

>>>

ZURICH, May 5, 2010: ABB, the global power and automation technology group, has agreed to acquire Ventyx for more than $1 billion from Vista Equity Partners to become a leading provider of software solutions for managing energy networks.

Ventyx, based in Atlanta, Georgia, is a leading software provider to global energy, utility, communications, and other asset-intensive businesses, offering a broad range of solutions including: asset management, mobile workforce management, energy trading and risk management, energy operations and energy analytics. The company also provides software solutions for planning and forecasting electricity needs, including renewables.

ABB will combine its related network management business within the Power Systems division, with Ventyx to form a single unit for energy management software solutions. By providing ABB with broader access to the utility enterprise management market, the acquisition triples the energy management software market available to ABB.

“The big advantage for energy companies, utilities and industrial customers is that they will now have a single supplier of enterprise-wide information technology platforms and power automation systems,” said Joe Hogan, ABB’s CEO. “The advantage for our shareholders is a cash-generating acquisition in an exciting growth market, with a strong management team, a highly complementary offering and geographic scope, and an attractive return on capital employed.”

Ventyx has a large installed base in the US market and Europe and operates in more than 40 countries. Its customers include leading power utilities in the United States and Europe as well as industrial businesses. The company employs 900 people and reported 2009 revenues of about $250 million.

The acquisition is in line with ABB’s strategy to pursue growth opportunities that complement the company’s product, technology and geographical portfolio. It is subject to customary regulatory approvals, and ABB expects the transaction to be completed in the second quarter. ABB intends to pay for the acquisition in cash.

“Combining Ventyx’s leading software suite with ABB’s systems and unparalleled domain knowledge of the power industry will create a business that is ideally placed to offer solutions that will help to meet the challenges of rapidly evolving energy networks,” said Vince Burkett, Ventyx CEO.

One of Ventyx’s key software applications gives utilities and grid operators the information they need to better match electricity generation with consumption, even at the household level. By generating real-time information on electricity demand, pricing and availability, Ventyx’s software enables a practical business model for utilities to generate revenues from smart grids and carbon trading.

Ventyx’s load forecasting software can also help to integrate large amounts of unpredictable renewable energies, such as wind and solar power. The company provides other asset management applications to fully integrate a utility’s business and enterprise systems across the entire value chain, and a comprehensive service suite to facilitate efficient resolution of network failures.

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Posted: May 5th, 2010 under Current News, M&A, finance, smart grid.
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