Released April 08, 2004 | HOUSTON
en
Written by William Whitney, Senior Correspondent for Industrialinfo.com (Industrial Information Resources, Incorporated; Houston, Texas). The Baltimore Electric Power 2004 exposition attracted more than its share of energy industry heavyweights - but none more direct and polished than Cinergy Corporation's Chairman, President, and CEO, James Rodgers.
After participating in a feisty CEO roundtable discussion, which attracted more than 500 convention delegates, Mr. Rogers, accompanied by his Cinergy Corporation (NYSE:CIN) (Cincinnati, Ohio) colleagues, R. Foster Duncan (Executive Vice President and CFO) and David Mohler (General Manager, Strategic Planning), shared his insights exclusively with Industrialinfo.com.
Electric deregulation is among the most controversial issues at hand on the energy front. Mr. Rodgers describes the domestic division as, "Our country is sitting on an interesting fault line - with approximately half the states continuing to be regulated as they have historically been; while the other half of the states have endured restructuring legislation and are faced with the dilemma of continuing, going back or moving on to something yet to be invented."
Clearly, a large number of residential electric customers are not sure of their point on the circle - however on the industrial side the customers tend to be far more savvy and willing to shop rates and services. Mr. Rogers contends that over the past decade his residential customers disposable income has out-paced their energy costs adding, "National statistics indicate that's also the case with industrial customer base as their energy costs have not risen the extend of their other operating expenses."
Much attention has been focused on last year's blackout - which was the largest power outage in history. The Cinergy Corporation executives are reluctant to speculate on the actual cause, although they stress that reducing probability is most likely more practical then assuming that there is a solution that will eliminate Mother Nature's ugly hand and human error. Although, at press time, the United States Department of Energy finally released their investigative report (5 April 2004) which was highly critical of the industry's self-policing North American Electric Reliability Council and Ohio's First Energy utility.
On the fiscal side, the commercial investment community has cast shadows on power utilities overall stock performance. As purveyors of both natural gas and electricity, Cinergy has performed better than most. Mr. Rogers colleague, R. Foster Duncan observes that the 10-15 percent growth rates of four and five years ago that many utilities projected were simply unrealistic. He is also quick to point out that his organization looks to total shareholder return as a key element in overall growth performance. Additionally, on Wall Street dividend performance has become more important to investor appeal as aging baby boomers start to retire and seek to turn from investment to income.
Still another electric power controversy is coal vs. natural gas generation. Outspoken and forthright, Mr. Rogers says simply, "Coal is not a four letter word!" Simplistically his message is don't be deceived, don't hedge on whether coal is good, bad, or otherwise...the reality is that the electric industry needs to keep the lights on.
Coal is widely available and used by a significant majority of electric producers at considerably lower cost than natural gas. Conversely, there are huge reserves of gas, but much of it is on federal land and difficult to access. However, new technologies such as gasification - which utilizes natural gas to burn coal cleaner - are continuing to emerge along with limited wind and solar applications.
At present, the key component is regulation and the answer may be the alliance of regulatory agencies. Harvard University's William Rosenberg is a proponent of a "three party covenant", which unites a state utility with the state commission and the federal government. The twist is that the federal entity would not simply give the producer money, but rather underwrite loan guarantees. And it has worked; the example is Cinergy's Wabash, Ohio clean coal technology, IGCC (Integrated Gasification Combined Cycle) plant that united the state and federal governments with two private companies.
However, to a large degree the energy solutions offered to American industry in the next two decades will ultimately be based in geography and state and federal legislation.
After participating in a feisty CEO roundtable discussion, which attracted more than 500 convention delegates, Mr. Rogers, accompanied by his Cinergy Corporation (NYSE:CIN) (Cincinnati, Ohio) colleagues, R. Foster Duncan (Executive Vice President and CFO) and David Mohler (General Manager, Strategic Planning), shared his insights exclusively with Industrialinfo.com.
Electric deregulation is among the most controversial issues at hand on the energy front. Mr. Rodgers describes the domestic division as, "Our country is sitting on an interesting fault line - with approximately half the states continuing to be regulated as they have historically been; while the other half of the states have endured restructuring legislation and are faced with the dilemma of continuing, going back or moving on to something yet to be invented."
Clearly, a large number of residential electric customers are not sure of their point on the circle - however on the industrial side the customers tend to be far more savvy and willing to shop rates and services. Mr. Rogers contends that over the past decade his residential customers disposable income has out-paced their energy costs adding, "National statistics indicate that's also the case with industrial customer base as their energy costs have not risen the extend of their other operating expenses."
Much attention has been focused on last year's blackout - which was the largest power outage in history. The Cinergy Corporation executives are reluctant to speculate on the actual cause, although they stress that reducing probability is most likely more practical then assuming that there is a solution that will eliminate Mother Nature's ugly hand and human error. Although, at press time, the United States Department of Energy finally released their investigative report (5 April 2004) which was highly critical of the industry's self-policing North American Electric Reliability Council and Ohio's First Energy utility.
On the fiscal side, the commercial investment community has cast shadows on power utilities overall stock performance. As purveyors of both natural gas and electricity, Cinergy has performed better than most. Mr. Rogers colleague, R. Foster Duncan observes that the 10-15 percent growth rates of four and five years ago that many utilities projected were simply unrealistic. He is also quick to point out that his organization looks to total shareholder return as a key element in overall growth performance. Additionally, on Wall Street dividend performance has become more important to investor appeal as aging baby boomers start to retire and seek to turn from investment to income.
Still another electric power controversy is coal vs. natural gas generation. Outspoken and forthright, Mr. Rogers says simply, "Coal is not a four letter word!" Simplistically his message is don't be deceived, don't hedge on whether coal is good, bad, or otherwise...the reality is that the electric industry needs to keep the lights on.
Coal is widely available and used by a significant majority of electric producers at considerably lower cost than natural gas. Conversely, there are huge reserves of gas, but much of it is on federal land and difficult to access. However, new technologies such as gasification - which utilizes natural gas to burn coal cleaner - are continuing to emerge along with limited wind and solar applications.
At present, the key component is regulation and the answer may be the alliance of regulatory agencies. Harvard University's William Rosenberg is a proponent of a "three party covenant", which unites a state utility with the state commission and the federal government. The twist is that the federal entity would not simply give the producer money, but rather underwrite loan guarantees. And it has worked; the example is Cinergy's Wabash, Ohio clean coal technology, IGCC (Integrated Gasification Combined Cycle) plant that united the state and federal governments with two private companies.
However, to a large degree the energy solutions offered to American industry in the next two decades will ultimately be based in geography and state and federal legislation.
