We think you have liked this presentation. If you wish to download it, please recommend it to your friends in any social system. Share buttons are a little bit lower. Thank you!
Presentation is loading. Please wait.
Published byAiden Lewis
Modified over 3 years ago
® XII Repsol YPFHarvard Seminar Palma, Majorca-Spain July 7, 2001 Dr. Kenneth L. Lay Chairman Progress and Challenges for Electricity Liberalization
© 2001 UB-Repsol-v2-0601-2 Lessons from the California electricity crisis Progress of gas and electricity liberalization in the U.S. andEurope Challenges to complete the liberalization process Agenda
© 2001 UB-Repsol-v2-0601-3 Enron A Neutrally Positioned Market Maker Cash Markets Forward Markets Futures Markets Transactions Logistics Settlement eCommerce Platforms Risk Management Process Capital Market Making Capabilities Operating Capabilities Other Capabilities Define Product Standards and Contracts Obtain Access to Physical Product Develop Physical Distribution Market Making Establishes Liquidity Risk Management Innovative Structured Products
© 2001 UB-Repsol-v2-0601-4 California Wholesale Electricity Prices vs. Enron Stock Price $4,175
© 2001 UB-Repsol-v2-0601-5 California Wholesale Electricity Prices vs. Enron Stock Price $4,175
© 2001 UB-Repsol-v2-0601-6 Politically compromised industry restructuring (not deregulation) Unfavorable change in supply and demand fundamentals (the perfect storm) Politicized responses to distorted marketspiraling problems and badwill What Happened in California?
© 2001 UB-Repsol-v2-0601-7 Summary of the California Problem u Very little new capacity added u Tight emissions limits u Increasing dependence on imports u Old, inefficient (polluting) facilities subject to breakdown – emissions costs – gas costs u Lower hydro capacity availability u Reduced imports into California u Flat to lower supply u Increased demand u Shortages Blackouts u Skyrocketing wholesale prices u Powerful NIMBY/BANANA sentiment u Rapid economic growth throughout Western U.S. u Highly compromised, negotiated legislation u Retail Rate Caps (no demand response) u Stranded cost recovery mechanism inhibiting switching (utilities continue to serve most load) u State constructed spot market; no hedging u Deregulated wholesale prices u Bankruptcy u Utilities totally exposed to spot prices
© 2001 UB-Repsol-v2-0601-8 NIMBY S/D Shift Wholesale Price Spikes Wholesale Price Spikes Retail Price Caps Shortages Bankruptcies Conflict Lost Confidence Government Intervention Shortages Bankruptcies Spot Dependence Jawboning Populist Threats New Intervention
© 2001 UB-Repsol-v2-0601-9 Lessons Learned Liberalization did not cause Californias problems –Regulatory barriers to infrastructure, hedging, competition, and equilibration exacerbated by unfavorable supply and demand shifts Full liberalization is the answer for California –Real choices, opportunities to manage risk –Eased entry for new generation –Real market prices to end users (phase in) –Remove utilities (and state regulators) from procurement What doesnt work –Heated political rhetoric (actually increases costs in California) –Price caps (discourages production and forces political rationing) –Nationalization
© 2001 UB-Repsol-v2-0601-10 NIMBY and the Environment Postponed modernization of gas plants creates more pollution from ? Higher utilization of older, less efficient plants ? Emergency new generation such as diesel units Price spikes/shortages have resulted in air permit exceptions Imports of emergency power to California have exported environmental stress to the Southwest and Northwest
© 2001 UB-Repsol-v2-0601-11 Californias Aging Gas-Fired Powerplants Source: 1999 EEI Statistical Yearbook, Table 26 U.S. AverageLACaliforniaNYTX 10,360 14,425 10,506 10,264 9,751 9,883 FL 40% (BTUs per KWH) Gas Usage Premium = Emission Premium
© 2001 UB-Repsol-v2-0601-12 Emissions Comparison California Power Generation (pounds/MWh) Source: Energy and Environmental Analysis, Inc. Old Oil Boiler Old Gas Boiler New Gas CC 0.6 0.08 NO X 2.9 -85% -80% 2.9 -99% -60% 0.0040.01 SO 2 Old Oil Boiler Old Gas Boiler New Gas CC
© 2001 UB-Repsol-v2-0601-13 Emissions Comparison California Power Generation (cont.) (pounds/MWh) Source: Energy and Environmental Analysis, Inc. Old Oil Boiler Old Gas Boiler New Gas CC 0.1 0.04 PM 10 0.4 -60% -75% 1,644 -32% -26% 819 1,112 CO 2 Old Oil Boiler Old Gas Boiler New Gas CC
© 2001 UB-Repsol-v2-0601-14 If I wanted to raise rates, I could have solved this problem in 20 minutes. California Governor Gray Davis March 2001 The Golden What f?
© 2001 UB-Repsol-v2-0601-15 Supply is increasing Demand is moderating Gas and power prices are falling Californias Outlook is Improving Will a new message emanate from California?
© 2001 UB-Repsol-v2-0601-16 Market forces are smarter at allocating resources Open markets reduce prices and improve quality, other things the same Consumers like choice Why Liberalization?
© 2001 UB-Repsol-v2-0601-17
© 2001 UB-Repsol-v2-0601-18 Power Liberalization in the United States Most States are still moving ahead Markets representing 4% of population and 5% of total load have elected to delay market opening –Nevada and Oklahoma delayed indefinitely –Arkansas, West Virginia and Montana postponed Restructuring Legislation Enacted Comprehensive Regulatory Order Issued A Commission and/or Legislative Investigation is Ongoing No Significant Activity Status Current as of 06/01 Alask a * Legislation and Regulatory Order have both been issued. * * DE * AK HI 57% of this $220B market is expected to be deregulated by 2004
© 2001 UB-Repsol-v2-0601-19 Natural Gas Liberalization in the United States For Residential and Commercial Customers States with legislation passed or comprehensive PUC order issued for all customers; however, the quality of access may vary States with access for some commercial customers States considering reform No significant activity Source - Government Affairs as of 06/00 Note: Industrial open nationwide Alaska Hawaii
© 2001 UB-Repsol-v2-0601-20 Progress of gas and electricity liberalization in Europe
© 2001 UB-Repsol-v2-0601-21 Natural Gas Liberalization Summary EU Directive Not Yet Effective Very Limited Competition in Practice Some Competition – On The Way To Full Liberalization Fully Liberalized
© 2001 UB-Repsol-v2-0601-22 Pace of Natural Gas Liberalization Portugal GreeceFinland Sweden Luxembourg FranceDenmark Italy Netherlands Austria Belgium Spain Ireland Germany UK 0%20%40%60%80%100% Market Opening Market "Openness" Ireland
© 2001 UB-Repsol-v2-0601-23 Electricity Liberalization Summary Very Limited Competition in Practice Some Competition – On The Way To Full Liberalization Fully Liberalized EU Directive Not Yet Effective
© 2001 UB-Repsol-v2-0601-24 Pace of Electricity Liberalization Portugal Greece Finland Sweden Luxembourg France Denmark Italy Netherlands Austria Belgium Spain Ireland Germany UK 0%20% 40%60%80%100% Market Opening Market "Openness" Switzerland Norway
© 2001 UB-Repsol-v2-0601-25 Positive EU Liberalization Developments Faster-than-expected change in some countries Maturing trading market Role of EFET Florence and Madrid processes Number of countries adopting independent regulators Proposed energy directive (acceleration directive)
© 2001 UB-Repsol-v2-0601-26 Challenges to complete the liberalization process in Europe
© 2001 UB-Repsol-v2-0601-27 Cross-border access problem for gas and electricity Lack of attention to wholesale markets Resistance to the proposed energy directive NTPA and unbundling problems EU Liberalization Issues
© 2001 UB-Repsol-v2-0601-28 Concentration from integration/mergers Upstream/importer concentration in gas Inadequate policies from European Commission Gas-oil price link on the continent EU Liberalization Issues (cont…)
© 2001 UB-Repsol-v2-0601-29 Competition Works! Since May 1999 all domestic electricity customers in Great Britain have been able to choose which companies supplies their electricity.... The 6.5 million customers who had changed their electricity supplier by June 2000 have seen their bills fall by £299 million [15 per cent real].... The 19 million customers who have not switched suppliers could save up to £674 million, or 13% per cent of their annual bills were they to switch. - UK Office of Gas and Electricity Markets, Giving Domestic Customers a Choice of Electricity Supplier (January 2001)
© 2001 UB-Repsol-v2-0601-30 Market signals intelligently drive production and consumption in open markets Reserve development, LNG expansion, and financial hedges can meet growing customer requirements Beware of half slave-half free approaches--the EU does not want to have a California Security of Supply A sophisticated market can manage supply security under liberalization
© 2001 UB-Repsol-v2-0601-31 Bad California Dreaming: Warnings for Europe? Let the market work –Reveal supply/demand imbalances rapidly –Connect the functions of the wholesale and retail markets Avoid political/regulatory favors to privileged market parties Safeguard efficient functioning of the gas market
© 2001 UB-Repsol-v2-0601-32 Governments and Civil Society All Have a Role in Market Liberalization Affordability Technological Progress Reliability Environmental and Social Sustainability
Energy in Todays Economy: Challenges and Opportunities Dr. Kenneth L. Lay Chairman, Enron Corp. Economy Roundtable Austin, Texas January 3, 2001 For further.
1 European Commission DG TREN / C: Conventional Energy The Regional Electricity Market in South East Europe: Mechanisms and Aims in Unified.
Christopher Burleson Leslie Kay Ritchie Jitesh Sharma European Energy Restructuring: The Quest for a Competitive Single Energy Market.
A 2030 framework for climate and energy policies Marten Westrup
Prospects for Energy Prices Presented to Sustainable Energy Ireland by Dr Gareth Davies, Managing Consultant Thursday July 22nd 2004.
BAU 2011 Europe’s building industry after the crisis – What now? Erich Gluch ifo Institute for Economic Research, Munich BAU Information Talks on 28 October.
Impact of Liberalization of the Electricity Market on Energy Efficiency, Quality of Supply and Environmental Performance Eric BONNEVILLE ECI Webconference.
Natural Gas – Some Regulatory Issues Oil & Gas Industry Practice.
© Vattenfall AB The Swedish Power Market Presented for Invest in Sweden Agency and Sun Microsystems Stockholm 20 March, 2009 Sandra Grauers Nilsson, Vattenfall.
1 Copyright © 2013 Elsevier Inc. All rights reserved. Appendix 01.
– The appropriate route to increased competition? – Ownership Unbundling Brussels, February Results of an A.T. Kearney study.
Andrea Mariottini Riello Gas Boilers Division
The future of energy in Germany – Towards an age of renewables
1 7 th Progress Report: The regional and urban dimension of Europe 2020 Lewis Dijkstra Deputy Head of the Analysis Unit DG for Regional Policy European.
1 The Northern Ireland Energy Agenda Regulator’s Briefing 24 April 2008.
Norges Bank 1 Economic perspectives Charts Address by Governor Svein Gjedrem at the meeting of the Supervisory Council of Norges Bank on Thursday, 15 February.
“Review Study Guide nightly”
Electricity and Natural Gas Supply, Reserves, and Resource Adequacy CMTA Energy Conference Energy: Growing Californias Economy William J. Keese California.
Local Report 2010 Switzerland 14th June Design of the study.
The European Lighting Industry Position on How to Maximise the Potential Benefits of European Policy on Energy Efficiency in Lighting January 2008.
1 Climate Change Policy and Regulatory Jurisdiction James Bushnell UC Energy Institute Comments drawn from Bushnell, Peterman, and Wolfram, Local Solutions.
The work of European energy regulators on generation adequacy FTS-CEER workshop on Regulatory Aspects of Power Capacity Markets 7 February 2012.
New Build Nuclear: Who takes completion risk? Platts Nuclear Energy – Opportunities for Growth & Investment in Europe by Milton Caplan President, MZConsulting.
How much do you know about Europe? The European Day of Languages 26 th September 1Lancashire County Council.
PERSPECTIVES OF THE COMMON BALTIC ELECTRICITY MARKET Prof. Inna Steinbuka, Chair, Public Utilities Commission, Latvia The Institute of Economic Affairs.
McDonald’s calendar 2009.
European Parliament February rd energy package Customers point of view Effects of the Package on Consumers prof. Krzysztof Żmijewski Warsaw University.
McGraw-Hill/Irwin Copyright © 2010 by The McGraw-Hill Companies, Inc. All rights reserved. Global Business and Accounting Chapter 15.
Report on the State of the single market integration 2013 Meeting of the Committee on the Internal Market and Consumer Protection, European Parliament.
EMIG Electricity Market Investment Group Presentation to the Ontario Energy Board February 17, 2004.
A Changing Europe – What Does it Mean for Petcoke? McCloskey’s Petcoke Conference July 20, 2004 by Holger Dewald Ben Ziesmer.
Market4RES –the policy framework
© 2000 JN Natural Gas Outlook & Issues AB 1890 Implementation Group Annual Meeting November 14, 2000 ®
The South East Europe Natural Gas Market FABIO TAMBONE & SERGIO ASCARI (Autorità per lenergia elettrica e il gas)
Legal Framework, Investment Opportunities and Technical Innovation in the Electricity Sector Security of Supply through competitive markets: Design of.
1 Meeting carbon budgets – 5th Progress Report to Parliament Committee on Climate Change, June If you want to tweet about this report.
California Energy Crisis: Fact or Fiction? Presented to The California Independent Petroleum Association June 2002 Richard McCann, Ph.D. Partner, M.Cubed.
Euroheat & Power 1 Boosting Innovation from Research to Market District Cooling in Europe Potential and Benefits Tomas Bruce President Euroheat.
Press Conference by EU Commissioners Viviane Reding and Meglena Kuneva.
Zagreb, 28 September 2004 The South East Europe gas market: a preliminary analysis of facts and opportunities from the Regulators perspective GAS TASK.
Chapter 1 The Study of Body Function Image PowerPoint
Electric Restructuring In Pennsylvania Sonny Popowsky Pennsylvania Consumer Advocate May 10, 2007 Institute for Regulatory Policy Studies Transforming.
©Brooks/Cole, 2001 Chapter 12 Derived Types-- Enumerated, Structure and Union.
Japanese Electricity Market M. Hossein Javidi Iran Electricity Market Regulatory Organization & Administrative Department for Electricity Market Regulatory.
Globalization and International Trade Lecture 8 – academic year 2014/15 Introduction to Economics Fabio Landini.
European Commission Directorate-General Employment, Social Affairs and Equal Opportunities New Skills for New Jobs Annual Northern Ireland Skills Conference.
STATE OF PLAY - FORECASTS FOR EUROPEAN CONSTRUCTION
1 April 2006 Collaborative Labeling and Appliance Standards Program (CLASP) The Rationale for Energy Efficiency Standards and Labels.
Jacobs and Associates Growth, Flexibility and Protection: The Results of Regulatory Reform in OECD Countries Scott H. Jacobs Jacobs and Associates, An.
© 2017 SlidePlayer.com Inc. All rights reserved.