POWER July 2010 - 59

ELECTRIC POWER 2010: WHERE THE GENCOS MEET
Industry Pivots on Natural Gas,
Hails Cap and Trade
At the opening ELECTRIC POWER 2010 plenary session, both the keynote
speaker's address and discussion among the Power Industry Executive
Roundtable participants pointed to the renewed appeal of natural gas and
proposed cap-and-trade legislation as being potential game-changers for
the U.S. power industry.
By Jason Makansi, Pearl Street Inc.
T
he keynote address at May's ELECTRIC
POWER 2010 in Baltimore, and
comments by the panel of industry executives
at this session, revealed the key but
subtle role that natural gas will play in the
coming years. Meanwhile, everyone loves
cap and trade as it now stands before Congress,
even if it's because something is better
than nothing, or because it beats the regulatory
drum being pounded at the Environmental
Protection Agency (EPA). The appeal of
" unfettered " electricity markets continues to
recede, while coal, in the figurative sense, is
staring at the chassis of the bus.
When I was part of a public equities investment
fund focused on the electricity
production and delivery value chain, I developed
a " dashboard " that would reflect
1. Keynote speaker Richard McMahon.
McMahon is the executive director of
Energy Supply and Finance for the Edison
Electric Institute. Source: POWER
the state of the industry. In the center, the
speedometer, if you will, was the forward
price of natural gas. Everything on the
supply side of the business pivots around
it, I coached my colleagues.
Industry Revelations
You didn't hear that directly, if you were
among the approximately one thousand industry
professionals who gathered for the keynote
session. But that's what the underlying message
was. Sure, there was handicapping of the
American Power Act (APA), recently reported
out of committee in the Congress; nods to the
smart grid; nearly unanimous agreement that
cap and trade as currently stipulated in the
APA is a good thing; tips of the hat to more
renewable energy; recognition that real electricity
rates will keep escalating, despite the
recessionary blow to demand; and polite discussion
about the rock and hard place between
which the coal industry finds itself today. But
so many of these discussion threads, implicitly
or explicitly, seemed to weave together and
lead back to gas.
Before we get to all that, let me share with
you some true revelations made by the keynote
speaker, Richard F. McMahon, executive
director of the Edison Electric Institute
(EEI) (Figure 1), and the Power Industry Executive
Roundtable panelists (Figure 2) during
the session:
■ If the derivatives regulation piece of the financial
overhaul bill passes Congress, the
typical investor-owned utility would need
2. The 2010 Power Industry Executive Roundtable panelists. From left to right:
PJM Interconnection Senior Vice President Operations Mike Kormos; Calpine Corp. Senior Vice
President Power Operations John Adams; Duke Energy Group Executive and President Commercial
Businesses Keith Trent; NRG Energy President Northeast Region Drew Murphy; Constellation
Energy Group Executive Vice President, Corporate Affairs, Public and Environment James Connaughton;
and Moderator Dr. Robert Peltier, PE, editor-in-chief of POWER. Source: POWER
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