July 30, 2010

The Gulf Coast has always indulged the power sector more than the rest of the country. Getting permission to build fossil-fired generation, as well as nuclear plants and LNG facilities, has been typically easier there than elsewhere.

The same is true for both deep and shallow water drilling for oil and gas in the Gulf of Mexico. After all, the region's economy is dependent on that industry. But the BP oil spill has changed some attitudes and forced some additional study. The Obama administration has thus proposed a new moratorium on drilling in the deep waters for oil while giving the less-risky shallow water natural gas developers some latitude.

July 28, 2010

Equilar, a compensation research firm, reported that in 2009 the median compensation of CEOs for the top 200 companies declined 13 percent from the previous year to $7.7 million. The decline was attributed to stock and option awards losing value because of the 2009 stock market plunge. Yet an SNL Financial study of utility CEO compensation in 2009 reveals that the top 25 utility CEOs saw their executive compensation increase by 39 percent to 123 percent and 49 of the top 50 showed rising packages.

The utility industry "may have had a bigger recovery over that time period when data was collected," explained Kevin Hollock, director of Cornell University's Institute for Compensation Studies. Since consumers rely on electricity and don't cut back significantly even in a recession, the energy industry is much "less cyclical than buying fancy shoes," he added. Yet Hollock was surprised by the rise in compensation for energy CEOs compared with other industries.

July 26, 2010

Don't confuse the BP oil spill with the future of natural gas. The fuel is expected to be a global contender when it comes to reducing greenhouse gas emissions from power plants through 2050.

That's the conclusion of an MIT study group, which says that natural gas will erode coal's market share over time and particularly after domestic and international carbon controls are put in place. After 2050, however, the study -- managed by the MIT Energy Initiative -- says that carbon-free fuel sources that include both renewables and nuclear power will assume the central leadership roles.

July 23, 2010

Retail electricity competition has taken a drubbing. But information now out is suggesting that the concept is alive and well, and likely to gain momentum: More customers switched in the first quarter of this year from incumbent utilities to alternative suppliers that purport to deliver lower costs and better services.

Proponents of restructuring say that excessive regulation will lead to inefficiencies that work to the detriment of consumers and new innovation. Critics of retail deregulation are countering that it has always been a pipedream because electricity cannot be inventoried, necessitating that the industry always be under strict oversight.

July 21, 2010

When the World Bank approved a $3.75 billion loan to build a highly efficient coal plant in South Africa, it provoked outrage among many in the developed world who responded that those resources should go to cleaner energy forms. Supporters have said, however, that the facility is needed to bring electric power to the underserved.

In reality, coal remains the world's most dominant fuel source -- and one that is consumed by both rich and poor countries alike. That's why the pressure to clean it is building. If burning it can become increasingly clean and efficient, it will remain viable in world markets while modern plants will get funded and constructed.