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EV

Utilities' Role in Transport Electrification: Capturing Benefits for All Ratepayers

An EV charging infrastructure network only provides value and reduces range anxiety to the degree it is well maintained.

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Figure 1 - Net Societal Benefits from EV Charging Load
Figure 2 - San Francisco Bay Area Feeder and Substation Utilization
Figure 3 - Net Ratepayer Benefits from EV Charging Load
Net societal benefits occur, in large part, because electric vehicles require less primary energy than their gasoline counterparts.
Utility load growth from  EVs can actually benefit all ratepayers  by providing societal benefits and reducing utilities’ average cost of service.
Author Bio: 

Nancy Ryan is a Partner at Energy and Environmental Economics (E3), and an economist with over two decades of energy experience. Dr. Ryan was formerly a Commissioner at the California Public Utilities Commission, where she held a number of other senior positions. She taught applied economics at UC Berkeley’s Goldman School of Public Policy for many years, and has held senior climate advocacy roles at Environmental Defense Fund. Lucy McKenzie is a Consultant at E3, where she focuses on electric vehicles and other distributed energy resources. She holds a Master of Public Policy degree from UC Berkeley’s Goldman School, and spent 5 years working on energy projects at economic consulting firm Analysis Group, Inc.

The authors would like to thank former CPUC Commissioner Rachelle Chong, as well as Hilary Staver and Eric Cutter of E3, for their thoughtful suggestions and review.

Utility load growth from EVs can actually benefit all ratepayers by providing societal benefits and reducing utilities’ average cost of service.

Gasoline Spillover

Will high pump prices affect utility customer behavior at home?
Although natural gas and electricity is cheap, skyrocketing gasoline prices provide an opening for utilities to engage customers. Knowledge is power, and with the right tools in place, utilities can be outstanding teachers.

The Fortnightly 40 Best Energy Companies

(September 2012) Our annual financial ranking shows some remarkable shifts among the industry’s shareholder value leaders. Despite flat demand and low commodity prices, investor-owned utilities are investing heavily in capital assets. Investment discipline and operational excellence distinguish leaders on the path to financial performance.

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The <i>Fortnightly 40</i> Best Energy Companies
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Behind the Rankings
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Our annual survey of power and gas company performance relies on a modified DuPont model, based on its 89 year-old namesake approach for calculating shareholder value in asset-intensive industries. In 2008 we tweaked the model—which originally was developed in 1919 by a finance executive at E.I. du Pont de Nemours & Co.—to measure growth on a long-term, sustainable basis (See sidebar “F40 Model Characteristics”).

The Fortnightly 40 model combines several common measures of financial performance—profitability, dividend yield, cash flow, return on equity (ROE) and return on assets (ROA)—together with a sustainable growth-rate calculation, to produce an overall picture of a company’s value and long-term prospects. To avoid the pitfalls of short-term fluctuations, the model evaluates four years of results for each company. (This represents a change from 2008 and previous F40 rankings, which considered three years of financial results.)

The universe for the ranking—which this year numbers 82 companies—includes publicly traded, U.S.-based companies with major assets in energy production, transportation and retail delivery, and positive shareholder equity value for the past four years. Pure-play mining and exploration & production companies are excluded, but a few pure-play merchant power generation companies are included in the sample.–MTB

Credits: The Fortnightly 40 model was developed in 2006 by former Fortnightly Executive Editor Richard Stavros and Jean Reaves Rollins, managing partner of the C Three Group in Atlanta.

F40 Model Characteristics

Time Frame: 4-year average

 

Sample: 80 largest U.S.-based investor-owned power and gas companies, with assets in power generation or electricity and gas transmission and distribution.

Components:

1. Profitability= Margin = Income from Continuing Operations/Total Revenues.

2. Dividend Yield= Annual Declared Dividends/Year-End Stock Price.

3. Free Cash Flow= Operating Cash Flow from Continuing Operations – Capital Expenditures.

4. DuPont ROE Five-Ratio Model:

a. Earnings after taxes (EAT) = Income from Continuing Operations after Taxes;

b. Earnings before taxes (EBT) = Income from Continuing Operations + Income Taxes;

c. Earnings before interest and taxes = Income from Continuing Operations before Income Taxes and Interest;

d. Revenues = Total Revenues;

e. Assets = Total Assets; and

f. Equity = Total Common Shareholders Equity.

5. DuPont ROE= (EAT/EBT)×(EBT/EBIT)×(EBIT/Revenues)×(Revenues/Assets)×(Assets/Equity).

6. DuPont ROA= (EAT/Revenue)×(Revenue/Assets)

7. Sustainable Growth= DuPont ROE×(1–Dividend Payout Ratio).

8. Fortnightly Index9. Companies excluded from the FY2011 survey due to M&A activity: Allegheny Energy, DPL, and Nicor.

Author Bio: 

Michael T. Burr is Fortnightly’s editor-in-chief. He acknowledges the editorial contributions of the C Three Group and Accenture.

A challenging year brings a change in the rankings.

Vendor Neutral

Panda Energy awards turnkey $300 million turnkey contract to Siemens and Bechtel; Dominion starts up 585-MW CFB plant; Ocean Power Technologies and Lockheed Martin partner on wave power project; Infigen awards wind turbine service contract to Mitsubishi; ITC commissions 345-kV line in Oklahoma; ABB tests world’s biggest DC transformer; Xcel gets green light for Tres Amigas-area transmission upgrades; plus contracts and announcements from Elster, Sensus, Enertech, and others.

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Dominion Virginia Power started up the 585-MW Virginia City circulating fluidized bed power plant in July.
The latest inspection report from the Nuclear Regulatory Commission indicates steam generator tube wear at the San Onofre nuclear plant was caused by excessive vibration under certain circumstances.
ITC Great Plains commissioned the Hugo-Valliant HVDC transmission line and substation project in Oklahoma.
The first three wireless EV charging systems were installed on Nissan LEAFs as part of the Plugless Power program. The systems use electromagnetic induction to charge EV batteries without driver interaction.
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Vendor Neutral

EV Hype and Hope

Solyndra shakeout hits the electric car business
Six months after Solyndra's bankruptcy, the resulting controversy is affecting other companies that were hoping to secure loans from the Department of Energy. Lawmakers want to know whether the DOE loan program has stalled out -- and whether reforms are needed to clarify the mission and the risks for taxpayers.

EVs and the Smart Grid

Accelerating Progress
Better batteries, renewables and more intelligent electricity networks are converging to deliver efficiency and environmental improvements. Electric vehicle (EV) batteries are both the stumbling block and the catalyst for transformative change.

Killing the Electric Car ... Again!

EV Policy Dilemma
Perverse policy signals are pitting utilities against the EV revolution. Will regulators give utilities the incentives they need to pave the way for electric transportation?