FMEA-FMPA Annual Conference

The FMEA-FMPA Annual Conference is a summer highlight for representatives from all segments of the electric utility industry: public, private and cooperative.

The 2010 FMEA-FMPA Annual Conference will be held July 20-23 at the Ritz-Carlton, Naples.

View 2009 speaker presentations

The 2009 FMEA-FMPA Annual Conference brought together electric utility decision-makers and some of the most skilled and formidable speakers on economic, energy, legislative and leadership issues.

The Conference would not have been possible without the support of the following sponsors:

Gold: Bank of America Merrill Lynch

Silver: Asplundh Tree Expert Company; Florida Power & Light: GE Energy: Osmose Utilities Services Inc.; POWER Engineers Inc.; R.W. Beck Inc.; Southern Power Company; Sterne Agee; The Energy Authority; and Wachovia Bank

Bronze: Black & Veatch; Citigroup Global Markets; Downes Associates Inc.; Dunlap & Associates Inc.; Morgan Keegan; Nixon Peabody LLP; PowerServices Inc.; Progress Energy; Purvis, Gray and Company; Solar Source; Spiegel & McDiarmid LLP; Stanley Consultants; Tampa Electric Company; and Wärtsilä NA Inc.

Steve Ford, presidential son and actor, shared insights into leadership through stories about his parents President Gerald Ford and Betty Ford.

In addition to teenage antics, such as fooling inattentive secret service agents into thinking he had been shot, staring in many feature films and following in his mother’s footsteps as a recovering alcoholic, Ford shared stories about the leadership of his father, Gerald Ford, whom, he says, always thought about goals and actions in terms of their long-term affect, on his life, his family and the country whose leadership he inherited.

“Long-term thinking may ruffle feathers,” Ford quoted his father but, “the long term is where the answers are.” Ford emphasized the importance of character – doing the right thing when no one is watching – and the importance of working with people and listening to all ideas.

This thinking was evident in his decision to pardon Nixon, It cost him the next election, but helped to heal the country. Years later Senator Edward M. Kennedy recognized Ford with the John F. Kennedy Profile in Courage Award for his self-sacrificing decision.

Robert Kappelmann, energy and environmental policy consultant with RLK Associates, discussed the current and likely future actions of federal and state legislative proposals regarding climate change.

Kapplemann explained that CO2 legislation is based on addressing 80 percent of the carbon dioxide in the environment, because global warming scientists agree the earth can process 20 percent of it. But the real drivers of the legislation is the promise of a $200-billion-plus carbon trading market; and many other financial opportunities and special interests including a federal revenue source; a fundraiser for environmental organizations and lucrative opportunities for environmental consultants.

Kapplemann reviewed thethe current proposed federal CO2 legislation: HR 2454 and The Clean Air Act (CAA), stating that the Clean Air Act is actually better for utilities because

• Conventional Wisdom is that GHG regulation under the CAA would give EPA total control of the U.S. economy. (So does HR 2454).

• Under CAA, any GHG source emitting more than 100 tons/year is regulated.

Glenn Cannon, former general manager of Waverly, Iowa, Light and Power, and an Energy Consultant, offered insight into the evolving role of the electric utility as customers’ expectations evolve with emerging technologies and changing views on energy use.

Cannon explained that whether or not you believe in human-induced global warming trends, as natural monopolies, municipal utilities have a responsibility to be good stewards of the environment.

He discussed the many environmentally focused programs Waverly Light and Power offers its customers including:

• 90 percent participation from customers for rebate programs for air-conditioners, refrigerators, dishwashers and clothes washers. The program actually caused the energy-efficient appliances, which were being marketed in California, to become available in the state of Iowa.

• “Good Cents Standards” rebates for homeowners and home contractors that led to 95 percent participation on new construction with standards including; sizing heating and cooling equipment using ACCA Manual J standards; an air conditioning efficiency standard of 14 SEER or higher; a heating-equipment efficiency standard of 92 percent or higher; and caulking inspections prior to the installation of wall insulation and sheet rock; blower door testing at the completion of construction to certify the home meets air infiltration tightness and ventilation rates are met.

• Commercial and industrial rebates for improving lighting and HVAC.

Mark Gabriel, senior vice president and principal with R.W. Beck, discussed planning for the future of the electric utility industry – customer growth, new generation, changing demographics, the effects of smart-grid and emerging legislation. He stated:

• ACES legislation (American Clean Energy and Security Act) is not likely to pass the Senate in 2010.

• The electric grid will need to be able to accommodate one million plug-in electric cars by 2028 that will not always be charging in the same areas. People are not going to want to wait until nighttime to plug in their cars.

• The smart grid or “Intelligent Infrastructure” will piece together much like the highway system in the United States or the Internet – in bits and pieces of technology and tools.

• Customers want choices in their renewables and they want to be engaged in the process.

• Carbon offsets are like paying someone else to stop smoking cigarettes for you, and everyone needs to take responsibility for their own carbon output.

Dan Aschenbach, senior vice president of Moody’s Investor Service, provided an informative look into the bond-rating process stating:

• Municipal utilities as a whole have strong bond ratings.

• General qualities that lead to a good bond rating include: a limited default record; generally sound financial metrics; a strong link to local government with access to fiscal support in times of stress; and a past record of reliability and competitive pricing.

• “Optionality,” it’s the importance of having many and diverse options for fueling generation.

Sean Snaith, PhD, director of the Institute for Economic Competitiveness at the College of Business Administration of the University of Central Florida, explained the trends behind the current economic downturn and discussed the emerging signals of economic recovery. Dr. Snaith said:

• A recession is just part of the business cycle. We are in a natural downturn at the end of a peak. There is an upward trend coming soon. On a larger scale the economy is still improving even during a recession.

• The current recession began in December of 2007 and will most likely continue for another two months before recovery begins.

• The Great Depression was a bad recession badly managed.

• Overall recessions are becoming shorter and economic expansions longer because leaders have learned how to manage them.

• All of the economic stimulus projects, the first stimulus package, TARP (Troubled Asset Relief Program), and the second stimulus package, are doing their jobs – a combination of direct and immediate injections and time-released injections into the economy.

• Recovery will leave a long-lasting scar on the labor market as people will be apprehensive about growth.

Jeff Tarbert, senior vice president of APPA, discussed understanding the value of an electric utility. He noted that:

• Even if no one is thinking about selling the electric utility, leaders should know its value and it is important to use the correct tools to ascertain its value.

• The value of a utility cannot be ascertained by outside bids – values are not all financial. Public power utilities have proven to be more reliable than investor owned utilities.

• Leaders have an obligation to know the value of a utility, not just because of its sale value, but because it is needed to manage the utility in a way that maximizes its value to the city.

• Public power utilities pay more into the general fund than investor-owned utilities pay in taxes to defray the cost of running the city.

• Valuation techniques should include income, cost and market approaches.

• Ensure that your utility is protected by sale protections, such as requirements for a community (not potential buyer) funded valuation study.

Breakout sessions addressed issues including legal seminars, policy-makers forums and speaker on issues of controlling costs and providing outstanding service.

View speaker presentations