Who Pays When Utility Managements Screw Up?
NextEra-Dominion Energy Merger To Create World’s Largest Electric Utility Leonard S.
Hyman is an economist and financial analyst specializing in the energy sector.
He headed utility equity research at a major brokerage house and… Please excuse the infelicitous wording, but that is what this is all about.
Not missteps or misjudgments but genuine, massive screw-ups.
Policy makers in the United States worked out that problem over time, dealing with nuclear cost overruns and aborted projects.
Three utilities went bankrupt (only one being investor-owned) when the financial burdens of nuclear projects far exceeded the resources of the utility.
In most cases, regulatory agencies forced utility shareholders to bear some of the losses or imprudently incurred costs, customers paid some of the costs in higher rates, but creditors came out whole.
In the United States, regulatory agencies regulated not only prices, but also watched over utility financial policies, management dealings and quality of service.
They did not necessarily tell the utility how to finance, but they often set rates based on how they thought the utility should finance, and heaven help those who ignored that advice.
So there was little likelihood that financial misdeeds or self dealing would take place.
Furthermore, the companies and the regulators had an implicit deal.
The regulator granted the utility a modest profit that did not leave much margin for error or for unanticipated costs.
| Product | Price | Change |
|---|---|---|
| Brent Crude | $102.14/bbl | ▲ +0.34% |
| WTI Crude | $96.90/bbl | ▲ +0.21% |
| EN590 Diesel | $846/MT | ▲ +0.18% |
| Jet Fuel A-1 | $1090/MT | ▲ +0.55% |
| Mazut M100 | $450/MT | ▼ -0.15% |
| Bitumen 60/70 | $470/MT | ▲ +0.08% |
| Sulphur Gran 99.5% | $470/MT | ▼ -0.44% |
| Urea 46% Gran | $650/MT | ▲ +1.12% |
| NPK 16-16-16 | $460/MT | ▼ -0.28% |
| Nat Gas TTF | $15.42/MMBtu | ▲ +0.92% |
Price alerts · Industry news
Comments
Post a Comment