November 07, 2008

Supporters of wind power are whipping up support for new transmission. Without a notable increase in the capacity to carry such energy, the optimistic forecasts for more renewable power will never happen.

While the number of transmission miles is projected to rise in the United States over the next 10 years, the expansion will not occur at a sufficient pace to handle the anticipated growth in wind capacity. The expected congestion will assuredly impede utilities as they try to work more renewable energy into their portfolios. Such power facilities are often based in remote locations, requiring high-voltage transmission systems to ensure their energy supplies make it to population centers.

November 03, 2008

Electric and gas utilities are not insulated from the financial turmoil now rankling global credit markets. But those businesses are relatively well positioned to endure the potential hardship that could befall other industries. That's because they have solid cash flows and limited refinancing needs in the short run.

That's the conclusion that Standard & Poor's has drawn in its report on the utilities sector and the credit crisis. The ratings agency reviewed the cash position, pending debt maturities and available revolving credit capacity of varied utilities. It found that their risks are manageable given their current liquidity and expected expenditures.

October 24, 2008

An undertow resulting from the financial services clamor is dragging down its second utility victim: Reliant Energy, which had seen its stock value dissipate by more than 50 percent and which had been forced to put all or part of itself on the auctioning block.

The chaotic economic climate is due in some measure to market psychology. Clearly, the loose lending practices of the last five years have taken their toll. But at some point, the economy will stabilize and the demand for all products and services will rise, soaking up excess supplies. Uncertainty persists, however, leaving investors and consumers in limbo -- a lingering pessimism that has pushed stock indices to their lowest levels in years.

October 10, 2008

Commodity prices are a key component driving the American economy. But have such prices lately been the result of supply and demand or of excessive speculation?

Juxtaposing the positions provides an enlightening look at some of the factors that are controlling energy prices. Today's economy is fragile and concerns abound over whether recession is looming, creating weaker demand for most products and services that include oil and natural gas. With fewer buyers, prices fall. This scenario, in fact, has been occurring as commodity prices have been dropping.

October 08, 2008

Lehman Brothers' demise may lead to the rise of new and powerful players in the energy trading sector. Just as the investment banks stepped in to fill the void left by such unregulated energy trading organizations as Enron, newly-aligned financial institutions that understand risk management will likely participate.

The uncertainty now in financial markets makes it imprudent to speculate on what the future may hold for energy trading. In general, the pace of such commerce will slow in the near term but will likely resume to typical levels over time as nerves settle. The financial trading sector could possibly be a profitable one in the $400 billion a year electricity and natural gas industry. Meantime, carbon markets are another potentially rewarding venture for traders.