Oct 1998

The received wisdom when it comes to large electricity customers is that they are entirely focused on price. However, probing a little deeper shows that reliability is paramount, which can give existing suppliers a starting advantage. Further probing of this large market reveals unfilled needs for services and for more broadly capable suppliers, creating growth and margin opportunities for adept suppliers. Mitchell S. Diamond Vice President, Booz•Allen&Hamilton, Inc.

The dawn of the twenty-first century sees new challenges developing for electric utilities. The conjunction of technological change and a new political, regulatory and business environment means that opportunities are opening up while novel constraints are being introduced. The future will be decentralised, and equipment suppliers are shaping up to meet the needs of this new market. Dr-Ing Rainer Bitsch Siemens Power Transmission & Distribution Group

For regions without natural gas reserves, the advantages of gas-fired power plants can be gained through the import of liquified natural gas (LNG). The world’s first independent combined LNG terminal/CCGT power plant project has been brought to fruition by Enron in Puerto Rico, and this venture may act as a blueprint for other such installations around the Caribbean and beyond. Kenneth Koye Enron International

The lead developers on independent power projects hog the limelight and call the shots. As a consequence, the valuable contribution of minority investors can be overlooked, but they can bring important skills to the table that add value to a project. The needs and concerns of these smaller investors are different to the lead developers’, and care and attention is required to accommodate these. If they are successfully addressed, however, then minority investors can confidently book equity income for their shareholders. Lincoln Bleveans Illinova Generating Company

The ongoing restructuring of the US electricity industry is seeing large amounts of generating capacity being put on the market as utilities convert to wires-only businesses. Extricating generation from previously integrated organisations throws up interesting legal challenges. Possible templates for agreements to perform this separation were drawn up for the acquisition of New England Electric System’s generating assets by USGen, and are described here. Alan Gover Weil, Gotshal & Manges LLP, Houston

The advent of liberalisation in Europe, as in the US, has led to a lively debate on the magnitude of stranded costs and how they will be paid. The European Commission is keen to see these costs accounted for ahead of market opening, but this will not be easy. Taking a lead from American utilities, European firms may sell assets to realise their true value, and offset the debts incurred to pay for them. Simon Allen PricewaterhouseCoopers, Global Energy & Mining Group