1 / 7

Further Efficiencies In The Electricity Distribution Sector

Further Efficiencies In The Electricity Distribution Sector. February 19, 2004 Presented By: Robert M. Watters. Process to date has had no meaningful effect 90+ utilities Energy policy, performance and economy hampered by existing situation Lowest common denominator controls process

Download Presentation

Further Efficiencies In The Electricity Distribution Sector

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript


  1. Further Efficiencies In The Electricity Distribution Sector February 19, 2004 Presented By: Robert M. Watters

  2. Process to date has had no meaningful effect 90+ utilities Energy policy, performance and economy hampered by existing situation Lowest common denominator controls process Price freezes created imbalance in earnings Status of Distribution Rationalization 2

  3. MEUs to have approximately 500,000 customers Probably 5-6 regions Centered around major load centers Consolidation by the carrot or the stick Some carrots Immediate full returns PBR ~ 5-10 years ~ rolling resets Capital structure flexibility Forced consolidation after 18 months PBR ensures efficiencies Borealis Recommendation 3

  4. Consolidation requires investment systems - growth requires investment buyouts - municipalities do not have funds Need for private sector investment Corporate only structure triggers federal tax at >10% ownership Also triggers transfer tax Other structure for ownership (i.e. partnership provides solutions) Need regulatory flexibility and deemed tax to facilitate structural solutions OEB needs to take macro view Tax management already performed by Revenue Canada Structural Ownership Impediments to be Addressed by OEB 4

  5. Should bring better Pricing stability New generation Size does matter higher volume = lower prices core competencies OEFC backstop needed to offset political uncertainty and credit issues Issues related to lack of supply not solved in short or medium term May not eliminate supply shortage in long term Default Supply / LSE’s 5

  6. Default Supply / LSE’s • Issues relating to contracted volume risk to be evaluated • LDC over or undercontracts • Issue is magnified with smaller LDCs • Approach would be similar to gas, but fundamental differences • Storage of gas reduces volatility • Main hub in Chicago provides a large source of supply • Still need some OEFC backed standby generation capacity 6

  7. Summary • Consolidation into large LDCs needed to make market function • Incentives are required • Possibly forced solutions • Structural ownership impediments need to be addressed by OEB • LSEs should improve commodity pricing • Generation shortage needs additional solutions 7

More Related