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DOE Chief Sees More Mergers, Partnerships in Power Arena

Secretary of Energy Samuel Bodman last Tuesday said he expects to see "more mergers and partnerships among power providers that are driven by strong business rationales and that do not depend necessarily on geographic proximity."

But some power industry officials see choppy waters ahead when it comes to the environment for merger and acquisition (M&A) activity in the sector. Exelon Corp. CEO John Rowe recently said that the U.S. is entering "an era when mergers are going to be more difficult again" and will "only be easy in places where there's a very troubled utility" (see NGI, June 5).

Meanwhile, speaking before a Washington, DC, event sponsored by the Community Power Alliance and the Energy Daily, Bodman also said that he remains "quite optimistic" that mandatory electric reliability standards will be in place early next year.

FERC is working to implement mandatory, enforceable electric reliability standards as called for by the Energy Policy Act of 2005. FERC earlier this year issued Order 672, a final rule on the certification of an electric reliability organization (ERO), and the North American Electric Reliability Council (NERC) filed an application to be certified as the ERO in April.

The Commission on July 6 will hold a technical conference to consider NERC's application and FERC staff's recent assessment of the proposed mandatory reliability standards submitted by NERC.

Addressing the issue of nuclear power, Bodman said that it's "hard for me to believe" that the U.S. will not see at least six nuclear power plants built in the U.S. over the next decade. "I think you'll see those six plants built and operating by the year 2015," Bodman said.

"Having said that, we don't need six plants. We need 16, or 26 or 56 plants. We need a lot of nuclear energy in this country..."

During the Q&A portion of the event, Bodman was asked to comment on the state of power competition in the U.S. He said that electricity deregulation "has had its ups and downs," adding that there are "issues that will have to be worked out in individual states and individual communities."

The DOE secretary said that it is "clear that we don't have a situation where one solution fits everything. Our electricity transmission and delivery system has developed over the years in a fashion that varies widely over our country. Therefore, trying to give a blanket answer, I think, is well nigh impossible."

"I will say that I think that we see some very good successes from the deregulatory effort and we see some areas where we clearly have problems. I think the issues really remain of trying to determine what is fair to both the investors who support the electric utilities on the one hand, as well as their customers. That's going to vary, according to whatever the situation is."

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