An Ignoble Experiment

2. Solar, wind, nuclear; Japan's energy future unclear

Customer satisfaction has improved for seventh straight year with regard to energy utilities, according to research from the American Customer Satisfaction Index (ACSI).

The ACSI benchmark is at its highest level since 1994 -- 77.4 on a scale of 100 -- across investor-owned, municipal and cooperative utilities, driven by lower average winter temperatures and low prices.

Residential customer satisfaction with investor owned utilities experienced a 1.3 percent increase to an ACSI benchmark of 77. CenterPoint Energy comes in at 84 and Southern Company at 83.

Natural gas service continues to improve, with a record-high benchmark of 82. Customer satisfaction with electric service is lower, but still the best in 10 years with a score of 76.

In the investor owned category, several utilities earned above-average scores of 80 to 82. Dominion Resources and MidAmerican Holdings are tied at 82, followed by NiSource and Entergy at 81. Sempra Energy, PPL and NextEra Energy all tie at 80, but for Sempra this represents a drop of 4 percent compared to last year.

Although most utilities show improved customer satisfaction scores, about one-third of investor owned utilities are showing lower scores. Consolidated Edison, for example, slipped 1 percent to 70 -- the lowest score among IOUs. Storms and merger challenges hurt American Electric Power and Duke Energy where customer satisfaction fell 5 percent for both to 75. Ameren has also had a bumpy ride with customers, coming under customer fire over electric rate hikes, including a sizable increase in December 2012 and another proposed for this spring.

"Customers are less happy with AEP, whose service territory…was hit hard by late winter storms in 2012," said Claes Fornell, ACSI founder and chairman. "For Duke Energy, the customer satisfaction downturn coincides with the acquisition of Progress Energy, a utility with a less-than-stellar track record in customer satisfaction."

ACSI notes the Long Island Power Authority's (LIPA) "torrential" 26 percent deterioration in customer satisfaction due to the utility's handling of Superstorm Sandy. The loss plunges LIPA down to a customer satisfaction score of 43 -- the lowest ever recorded for any company in any industry in the American Customer Satisfaction Index.

"This year's precipitous shortfall in customer satisfaction comes just a year after a large decline of 11 percent hit LIPA in the aftermath of Hurricane Irene," Fornell said. "Back-to-back big storms, followed by what customers considered protracted and inadequate response to outages, set the table for what is the lowest ACSI score on record."

For more:
- see the results

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By Barbara Vergetis Lundin

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3. NY organizations seek more consumer bark, less utility bite

Two years after the Fukushima disaster, Japan has scaled back its nuclear power and is seeking to diversify its energy mix.

Solar power is showing the most potential. In 2012, Japan added approximately 2.5 GW of solar energy capacity to the 4.8 GW already installed. The Japanese government continues to favor wind over solar energy, but the market shows a strong preference for solar, at least as long as the generous feed-in tariffs are kept in place.

It won't be all smooth sailing for the installation of solar in the country, while Japan's nuclear supports say that it is unwise to give up the advantages of nuclear power because of a single accident, but restarting the country's nuclear power plants is also an unpopular alternative, according to Professor Stefan Lippert, World Review expert on economics.

The prospect of restarting the reactors and building new nuclear power plants has not been ruled out, but the final decision on Japan's long-term energy strategy will not be made "before the 2020s," according to Lippert.

For more:
- see this article

Read more about: Solar power, Japan nuclear
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By Barbara Vergetis Lundin

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New York lawmakers, AARP and other consumer groups are targeting utilities to lower utility bills in the Empire State, which are currently some of the highest in the nation. The groups contend that New Yorkers need an independent watchdog in light of these high costs and unreliable service not only to protect consumers but to create a more competitive utility marketplace.

The groups announced legislation this week that would establish an independent utility consumer advocate office to represent the interests of New York consumers when utility companies press for rate hikes or other complex regulatory issues. New York is one of about 10 states lacking such an office.

"The bill is an important first step to reform the state utility consumer advocate function which has languished in recent decades," said Gerald Norlander, executive director of the Public Utility Law Project. "The former Consumer Protection Board's utility consumer advocacy function was replaced at the Department of State by a unit with less statutory scope and no ability to question decisions of utilities and their regulators in court."

The legislation, Assembly Bill 6239 and Senate Bill 4550 would give residential consumers in New York more of a voice in rate increase proceedings and other regulatory matters, level the playing field with utility companies, and save consumers money on their utility bills. A key component of the new office is the ability to appeal Public Service Commission decisions in court.

"The creation of an appointed advocate with the powers allotted in this bill would give New York utility customers a voice at the table and save them a considerable amount of money when it comes to the utilities they use every day," Assemblyman and author of AB 6239 Jeffrey Dinowitz said in a statement. "When the utility companies come with their hands out asking for a rate increase every customer in New York will know that there is someone at the table with the ability to question and review their proposals."

The Utility Consumer Advocate would be appointed to a six-year term by the governor and work to advance the public interest in fair rates and consumer protections for energy, cable, telephone and water utilities.

"As we come to grips with the aftermath of Superstorm Sandy, it is apparent the need for residential utility ratepayers to have an effective voice as potentially hundreds of millions of dollars in rate hikes and the overall accountability of utilities are considered by the Public Service Commission now and in the future," said Senator Diane Savino, author of SB 4550, in a statement. "Consumers need a constant voice at the table when decisions are made that affect many aspects of their daily life, how much they pay for their utility service and how reliable that service will be."

For more:
- read Senate Bill 4550
- read Assembly Bill 6239

Read more about: AARP, Utility Consumer Advocate
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4. DOE banking on solar

By Barbara Vergetis Lundin

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5. Researchers studying 4th generation nuclear reactors

Less than 5 percent of the country's 6,500 banks and lenders are actively involved in financing solar projects due to ongoing concerns about, and misunderstanding of, industry risks. Despite a robust market for solar installations, lenders struggle to efficiently underwrite loans in solar energy.

In response, members of the truSolar Working Group are continuing to develop uniform standards for solar project screening, rating and underwriting to reduce and reliably price financing risk, lower the cost of capital, and increase the availability of commercial lending for solar projects, helping market participants more accurately forecast asset performance throughout the lifespan of a project.

The U.S. Department of Energy's (DOE) National Renewable Energy Laboratory (NREL), and DOE's Sandia National Laboratories (Sandia) have recently provided their support of the group's efforts, which promise a market-driven solution to accelerate growth within the commercial solar segment, where common practices throughout the value-chain and adopted by development and finance can bridge the market more quickly toward securitization and solar becoming a significant asset class.

"truSolar represents a valuable opportunity to create a common approach to characterizing solar project benefits and risks and more precise alignment on pricing of project capital," said NREL Senior Financial Analyst Michael Mendelsohn.

Sandia's Roger Hill concurs. "This initiative could potentially lower transaction costs and improve access to financial capital critical to solar project deployment. We will be examining the risks inherent in projects to sharpen our analytical tools for criteria and assessment in technical areas including yield and reliability."

The group is identifying an industry standard through which a wide range of business methods, analysis tools, and related products and services from varying companies, can be applied. The initiative has been designed to foster best practices and encourage more reliable decision-making systems that tie into an industry-adopted credit screen. By scoring project performance, site profile and counterparty risk criteria with sophisticated rating tools, this framework could lower capital costs, reduce the risk of project failure, support trade credit insurance for power purchase agreement revenue and increase the bankability of the solar industry. The framework will be transferred to a standards body in 2014 and made available as open-source to the entire industry.

For more:
- see this article

Read more about: DOE, U.S. Department of Energy
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By Barbara Vergetis Lundin

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