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Utilities Deliver Rock-Solid Financial Performance in Annual Fortnightly 40 Study

Sept. 15, 2011

FOR IMMEDIATE RELEASE

Contact:
Michael Burr

burr@pur.com

320-632-5342
Public Utilities Reports, Inc.

Vienna, Va.: For three years running, Ohio-based utility DPL Inc. has delivered the best overall shareholder performance of any U.S. investor-owned utility company, according to a closely watched report published in the September issue of Public Utilities Fortnightly magazine.

The 7th-annual Fortnightly 40 Report (http://bit.ly/2011F40), sponsored by Accenture, ranked the four-year shareholder value performance of U.S. investor-owned utilities and merchant power companies. The C Three Group of Atlanta, which along with Public Utilities Fortnightly developed the F40 financial model, analyzed the annual reports of 82 power and gas companies to compare a series of shareholder-value metrics — such as profit margin, dividend yield, return on equity, return on assets and sustainable growth.

DPL, parent company of Dayton Power & Light, has held the #1 spot in the Fortnightly 40 report since 2009. DPL’s performance is distinguished by industry-leading returns on equity and assets, as well as strong free cash flow and profit margins. DPL’s perennial strength typifies the top ranks of the F40, according to Michael T. Burr, Fortnightly’s Editor-in-Chief. “Only two names changed in the top 10 ranks. Mirant exited as a result of its merger with RRI Energy, and Questar ascended to #3 by virtue of an asset spin-off,” Burr said. “F40 leaders have shown remarkable stability in performance for shareholders.”

Other movers in the F40 rankings include CLECO, Piedmont Natural Gas, and DTE Energy. DTE’s performance was strengthened by a 10-year program of cost control and operational improvements. In an interview for the report, DTE CFO David Meador told Fortnightly, “Technology deployed right will reduce costs and improve customer service.”

Rankings fell for gas pipeline company EQT and wholesale generator NRG. “EQT was weighed down by heavy spending on shale-gas development, while NRG’s rank was affected by its comparatively low returns on equity and assets,” Burr said.

Companies included in the 2011 F40 ranking include: AES, AGL Resources, Allegheny Energy, Alliant, AEP, Centerpoint, Chesapeake Utilities, CLECO, Delta Natural Gas, Dominion, DPL, DTE, Edison International, El Paso Electric, Energen, Entergy, EQT, Exelon, FirstEnergy, Gas Natural, Laclede, MGE, National Fuel Gas, NextEra, Nicor, Northwest Natural Gas, NRG, NStar, OGE, Piedmont Natural Gas, PPL, PSEG, Questar, RGC Resources, Sempra, South Jersey Industries, Southern Company, Southern Union, TECO, UGI, and WGL Holdings.

The 2011 Fortnightly 40 Report is available to subscribers at www.Fortnightly.com or http://bit.ly/2011F40. Trial subscriptions are available, allowing immediate access to the report.
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PUBLIC UTILITIES FORTNIGHTLY (www.fortnightly.com), published by Public Utilities Reports Inc., in Vienna, Va., is the journal of record for the U.S. utility industry, providing authoritative, in-depth analysis of trends in generation, transmission and distribution of electricity and natural gas. For more than 80 years, Fortnightly has delivered expert analysis to help utility-industry executives and regulators decide where to invest, how the industry will be regulated and what the future holds. Subscription rate: $287/year.

Blue Ribbon Commission Calls for ‘Single-Purpose’ Nuclear Waste Organization

Fortnightly just obtained a draft copy of the recommendations to be issued by the DOE’s Blue Ribbon Commission on America’s Nuclear Future.

Although the recommendations don’t explicitly call for a federal corporation (fedcorp) to take responsibility for spent-fuel management (as Fortnightly Contributing Editor John Bewick discussed in the May issue cover story, “Spent-Fuel Fedcorp”), it does call for a “new, single-purpose” organization to be created — in effect, a fedcorp or something like it.

-Michael Burr

BRC Draft Recommendations

Disposal Subcommittee

#1. The United States should proceed expeditiously to develop one or more permanent deep geological facilities for the safe disposal of high-level nuclear waste.

Permanent disposal is needed under all reasonably foreseeable scenarios.

Geologic disposal in a mined repository is the most promising and technically accepted option available for safely isolating high-level nuclear wastes for very long periods of time.

#2. A new, single-purpose organization is needed to develop and implement a focused, integrated program for the transportation, storage and disposal of nuclear waste in the United States.

  • The new organization should have:
    • a focused and well-defined mission,
    • the financial and institutional means to deliver on its commitments, and
    • sufficient independent authority-subject to appropriate financial, technical, and regulatory oversight-to provide institutional and programmatic stability over time.
  • Congress would play a central role in ensuring the accountability of a new waste management organization.

#3. Assured access to the balance in the Nuclear Waste Fund and to the revenues generated by annual Nuclear Waste Fee payments from ratepayers and utilities is absolutely essential and must be provided to the new nuclear waste management organization.

#4. A new approach is needed to site and develop nuclear waste management and disposal facilities in the United States in the future. We believe siting processes for all such facilities are most likely to succeed if they are:

 (1) consent-based

 (2) transparent

 (3) phased

 (4) adaptive

 (5) standards- and science-based

 #5. The current division of regulatory responsibilities between the U.S. Nuclear Regulatory Commission (NRC) and the U.S. Environmental Protection Agency (EPA) is appropriate and should continue.

In addition, we urge that new, site-independent safety standards be developed by the two agencies in a formally coordinated joint process that actively engages and solicits input from all the relevant constituencies.

#6. The roles, responsibilities, and authorities of local, state, and tribal governments with respect to facility siting and other aspects of nuclear waste disposal must be an element of the negotiation between the federal government and the other affected units of government in establishing a disposal facility.

All affected levels of government (local, state, tribal, etc.) must have, at a minimum, a meaningful consultative role in important decisions; additionally, states and tribes should retain-or where appropriate, be delegated-direct authority over aspects of regulation, permitting, and operations where oversight below the federal level can be exercised effectively and in a way that is helpful in protecting the interests and gaining the confidence of affected communities and citizens.

#7. The Nuclear Waste Technical Review Board be retained as a valuable source of independent technical advice and review.

Members should represent a carefully considered mix of scientists and engineers with the relevant mix of expertise.

Reactor and Fuel Cycle Subcommittee

#1. No currently available or reasonably foreseeable reactor and fuel cycle technologies including current or potential reprocess or recycle technologies have the potential to fundamentally alter the waste management challenge this nation confronts over at least the next several decades.

Put another way — we do not believe that new technology developments in the next three to four decades will change the underlying need for an integrated strategy that combines safe, interim storage of spent nuclear fuel with expeditious progress toward siting and licensing a permanent disposal facility.

#2. The Subcommittee concurs with the recent findings of the President’s Council of Advisors on Science and Technologies (PCAST), and recommends the need for better coordination of energy policies and programs across the federal government; for a substantial increase in federal support of energy-related research, development, demonstration, and deployment; and for efforts to explore new revenue options to provide this support.

#3. A portion of the federal nuclear energy RD&D resources should be directed to the U.S. Nuclear Regulatory Commission (NRC) to accelerate development of regulatory frameworks and support anticipatory research for novel components of advanced nuclear energy systems. An increased degree of confidence that new systems can be successfully licensed is important for lowering barriers to commercial investment.

#4. The United States should continue to take a leadership role in international efforts to address global non-proliferation concerns.

This could include: support for multinational, industrial-national, scale fuel cycle facilities, joint efforts with other countries to improve security and accountability technologies and protocols for nuclear materials and capabilities, and improvements in existing multilateral agreement frameworks.

Reactor and Fuel Cycle Subcommittee

#1. The U.S. government should provide stable, long-term RD&D (research, development, and demonstration) support for advanced reactor and fuel cycle technologies that have the potential to offer substantial benefits relative to currently available technologies in terms of safety, cost, resource utilization and sustainability, the promotion of nuclear nonproliferation and counter-terrorism goals, and waste storage and disposal needs.

#2. The Subcommittee concurs with the recent findings of the President’s Council of Advisors on Science and Technologies (PCAST), and recommends the need for better coordination of energy policies and programs across the federal government; for a substantial increase in federal support of energy-related research, development, demonstration, and deployment; and for efforts to explore new revenue options to provide this support.

#3. A portion of the federal nuclear energy RD&D resources should be directed to the U.S. Nuclear Regulatory Commission (NRC) to accelerate development of regulatory frameworks and support anticipatory research for novel components of advanced nuclear energy systems. An increased degree of confidence that new systems can be successfully licensed is important for lowering barriers to commercial investment.

#4. The United States should continue to take a leadership role in international efforts to address global non-proliferation concerns. This could include: support for multinational, industrial-national, scale fuel cycle facilities, joint efforts with other countries to improve security and accountability technologies and protocols for nuclear materials and capabilities, and improvements in existing multilateral agreement frameworks.

-END-

Nuclear Nightmare: What happens next?

As relief workers fan out across Japan’s eastern coast to find victims of this weekend’s devastating earthquake and tsunami, Tokyo Electric Power Co. (TEPCO) engineers are scrambling to prevent a runaway meltdown at three nuclear reactors, and trying to restore proper cooling to several others.

It’s a nightmare scenario by any definition. Countless families have been affected by this once-in-a-millennium disaster — and the nightmare isn’t over. In particular, Daiichi plant workers now are risking their lives, in what can only be described as an heroic effort to contain the nuclear crisis. Their sacrifice for Japan and the world shouldn’t be underestimated.

In the context of this barely comprehensible human tragedy, questions about how the meltdown will affect America’s nuclear future seem inappropriate. They’re also premature; the Daiichi situation is rapidly evolving as workers struggle to cool reactor cores, and assess possible damage to containment structures. In any case, we won’t know the full extent of the nuclear disaster for some time — perhaps weeks or even months.

However, when Japan gets past the immediate emergency and begins to rebuild, then it will be time to decide whether Daiichi is this generation’s Three Mile Island — i.e., whether it will end the industry’s plans for a nuclear renaissance. Greenpeace and other anti-nuclear groups already are saying Daiichi “proves” nuclear power is unacceptably dangerous and should be stopped. And politicians in some countries are calling for a halt to projects that were in the works. Whether this impulse gains strength in the coming months, or fades with the memory of the current nightmare, will determine how Daiichi affects the industry’s long-term future.

Alternatively, Daiichi could bring a constructive conversation about nuclear design and siting. It could serve as an object lesson for engineers who are planning or operating reactors in geologically active areas — or within range of a 14-meter tsunami. It could give the industry a chance to explain how the new designs are inherently safer than Daiichi’s 40 year-old boiling water reactors.

In short, when the time comes to consider what Daiichi means for the power industry, we might decide to learn the lessons it can teach, and use those lessons to build a safer nuclear future.

Until that time, however, we can only watch, and offer support to the resilient and resourceful people of Japan.

CO2 Nuisance Case Goes to Supreme Court

States to defend 2nd Circuit common law ruling

Courtesy of Utility Regulatory News #3998: An appeal of a Second Circuit decision that resurrected various nuisance lawsuits against five electric generation companies has landed before the U.S. Supreme Court.

The appellate court order was rendered when Justice Sonia Sotomayor was serving on the Second Circuit. She has recused herself from associated Supreme Court deliberations. The cases originated with eight states, one municipality, and three private entities filing suit against the generating companies. Asserting that the scientific consensus is that the emissions from such fossil fuel-fired facilities are a primary cause of global warming, the complainants sought the specific remedy of abatement.

A federal district court had dismissed the cases, saying that any consideration of nuisance arguments would be premature without a prior ruling on underlying environmental policy. The Second Circuit, however, determined that environmental statutes, such as the Clean Air Act, had not preempted the common law doctrine of public nuisance. According to the appeals court, the public health dangers stemming from climate change are undisputed, and since the Environmental Protection Agency has not yet promulgated standards for carbon dioxide or other greenhouse gas emissions, there was no basis for dismissing the nuisance claims outright. For the full story, subscribe to URN.

PG&E Meters Get Clean Bill of Health

In report to CPUC, Structure Group deems meters OK, but criticizes utility for poor communication

Weekly Update Courtesy of Utility Regulatory News #3988: Reviewing the results of a report it had commissioned after fielding more than 1,300 customer complaints about smart meters and associated high bills, the California Public Utilities Commission has concluded that the meters, as well as their related software and billing systems, were operating within industry norms and were accurate within approved standards.

The subject meters had been deployed by Pacific Gas & Electric Co. (PG&E) in the San Joaquin Valley area, with complaints about high bills ensuing  almost immediately upon their installation. In response to such inquiries, the commission had enlisted the services of The Structure Group (TSG) to evaluate and analyze the new advanced metering devices. After conducting laboratory tests, field tests, and end-to-end system tests, TSG found no problems with the meters and their connected systems. According to the TSG report, the metering devices were working properly and customer billings reflected the data collected from the meters. However, the audit team faulted PG&E for its initial response to consumer complaints, finding that its action in cancelling numerous bills, then rebilling customers without explanation, caused unnecessary confusion.

The utility also was criticized for failing to adequately communicate with and educate its customers about the new meters prior to rolling them out. A lack of appropriate communication protocols was also cited as being behind customer complaints of unsatisfactory service and delayed responses to their complaints. The audit disclosed that it took PG&E an average of 4.5 months to resolve smart meter-related billing disputes. For the full story, subscribe to URN.