Visit www.eei.org/issues/enviro/climate.htm for more information.

NUCLEAR NUMBERS 778 billion—kilowatt-hours (KWH) of nuclear power generated in 2002 769 billion— KWH of nuclear power generated in 2001 20—percent of electricity provided by nuclear power 13—equivalent of new reactors added in the past five years 1.68 cents/KWH—production costs of nuclear power in 2001 369 million—amount spent in dollars on security upgrades at nuclear facilities since September 11, 2001 7.3 million—average spent in dollars per site on security in 2002 103—number of nuclear reactors

GREEN MARKETS
There are differing views on how green the near-term future looks for some renewable energy sources. A recent report by Clean Edge, a research and consulting firm focused on renewable technologies, anticipates that the market for solar, wind, and fuel cell power will grow from $9.5 billion today to $89.0 billion in 10 years.

"Clean Energy Trends 2003," released in February, predicts solar photovoltaics will increase ninefold to $27.3 billion in 10 years, due in part, at least, to the fact that solar modules now sell for $2.50 per peak watt wholesale, compared to $6 a decade ago. The report also projects that wind power will grow from $5.5 billion to approximately $49.0 billion. In 2002, more than 6,500 megawatts of wind power were installed around the world, according to Clean Edge.

In addition, the fuel cell market will expand from $500 million to $12.5 billion by 2012.

The report also points out that renewable technology has an increasing share of venture capital. Overall venture investments in U.S. companies totaled $21.0 billion in 2002, down from $41.0 billion in 2001 and a high of $103.0 billion in 2000. Renewable investments, sinking as well, nevertheless fared relatively better: In 2002, venture investments in that sector were $488 million, down from $774 million in 2001 and more than $1 billion in 2000; but 2002 saw those investments take a 2.3 percent share of venture capital, compared to only 1.2 percent in 2000 and 0.7 percent in 1999.

President Bush's proposal in January to provide $1.7 billion in funding for fuel cell research and development and to push for hydrogen fuel cell cars by 2015 has helped to put fuel cells—a CleanEdge focus—front and center.

Some observers, however, are more skeptical about fuel cells staying there. The jump in fuel cell company stocks that followed Bush's state of the union address is "short-lived," says David Kurzman, analyst at H.C. Wainwright. Others agree: MacMurray Whale of National Bank Financial believes fuel cells in cars won't take off for another seven to ten years, and he would "not advise someone to invest heavily in something so far off," even though nearly every major car maker has a fuel cell program.

Some younger companies in the clean energy industry may not make it very far, largely due to a "want of consistent policies and sufficient capital," according to Clean Edge. Growth in renewables has been a result of state involvement through renewable portfolio standards (RPS) and other programs, according to the group. There are 12 states that have RPS, while debate over a federal standard continues.

Electric utilities and their customers, at least, are increasingly looking to renewables for energy. According to research by Chartwell, nearly 75 percent of utilities in the United States are ready to make green power available to their customers by the end of 2003. The percentage of utilities offering or planning to offer green power rose to 46 percent in 2002, up 16 percent from the year before; and 3 of 50 utilities said green power was their customers' most popular product. And then there are customers who are asking for "dark green" power—from noncombustible renewables like sun or wind—according to Chartwell.

A recent EPRI survey makes the point that new gas-fired power-plants, instead of simply adding to capacity, are hastening the retirement of older gas- and oil-fired plants. Not only that, the rate of construction cancellations has begun to rise in response to low wholesale prices. Both trends will narrow reserve margins—he future peak U.S. average reserve margin (under EPRI's estimates) dropped from a previously estimated average of 41 percent (in 2005) to 32 percent (in 2004). (See Figure 1.) In the current study, only two regions now fall into the "overbuilt" category (greater than 40-percent reserve margins), with the majority falling into the "robust" range (20-40 percent).

EPRI's study indicates total U.S. retirements during 2001-10 of 45,000 megawatts (MW) of oil-gas capacity and 15,000 MW of coal capacity, with a net of 79,000 MW of coal- and gas-fired projects withdrawn or canceled.

For more information, visit www.epri.com.

But employers shouldn't be too steamed. Users, according to the survey, spend an average of 5.9 hours per week online at home for work-related purposes. Looking at it a different way, of those with access at both home and work, 47 percent spend more time using the internet at home for work purposes than at work for personal reasons. Only 27 percent spend more time on personal pursuits than they give back to employers. And 25 percent report shifting their hours between venues evenly.

Perhaps, hypothesize the researchers, many people conduct personal business at work because the workplace offers high-speed connections. Also, since most computers still require an effort to boot up, consumers may be more likely to conduct personal business where their computer is on all day. In terms of working at home, the internet gives workers newfound freedom—a person can now leave the job early enough to have dinner with the family and afterward check email, conduct research, order travel, or purchase things for work.

Workers may also telecommute on an ad hoc basis, such as staying at home in the morning to catch up without distractions. Using that broad definition, Telework America estimates that almost 20 percent of the American adult workforce does some type of telework—working from home, in telecommuting satellite offices, or from the road.

TWENTY YEARS AND GROWING
In 1983, when a group of five Northeastern electric companies formed the Edison Electric Institute (EEI) minority business development committee, the few partnerships among electric companies and minority- and women-owned business enterprises (MWBES) typically included routine services. The contracts consisted of a few million dollars for such things as temporary personnel, janitorial services, and office supplies.

Today, in a measure of the growth of small businesses and utilities' deep community involvement, over 40 percent of shareholder-owned electric companies have partnerships with MWBES, and committee membership has grown to more than 100 operating companies. Moreover, their contracts go beyond traditional services to include work in critical industry areas: underground and overhead line construction, nuclear engineering services and construction management, meter reading, and pension fund management. Over the past 15 years, according to Shirley King, EEI's manager of minority business development, shareholder-owned electric companies have contracted more than $50 billion through MWBES.

It is an impressive picture of an industry that has become a leader in MWBE purchasing. By way of example, King cites last year's Supplier Diversity Development award winner, Georgia Power and its MWBE expansion in recent years—from 1999 to 2001, the amount of the company's MWBE contracts grew from $65 million to $112 million. (Read about this year's Supplier Diversity Award Winner.)

EEI's supplier diversity committee, as it is now called, celebrates this legacy at its 20th anniversary Supplier Diversity seminar and trade show in Atlanta, May 13-16, where it will announce new winners. Contact sking@eei.org for more information.

BACK TO DIVIDENDS
Since the fourth quarter of 2001, it has been push and pull when it comes to dividend policy among shareholder-owned electric companies. Although dividends are back in vogue and the majority of electric utilities would like to increase dividends to shareholders in conjunction with a back-to-basics strategy, many companies facing liquidity issues are not in a position to do so.

The shareholder-owned electric utility industry paid $13.7 billion in dividends for the 12 months ending September 30, 2002—that was a 2.30-percent increase over the $13.4 billion paid during the prior 12 months. Pushing this rise was the fact that basic common shares increased by 6.20 percent over the same time, the second straight year in which equity issuances exceeded $10.3 billion. And even though there was an overall decrease in average dividends per share (from $1.46 to $1.40), for the first time since 1998, the number of companies with dividend increases in 2002 nearly paralleled the number of those with an unchanged dividend policy. In essence, as companies pulled back from the rapid expansion of nonregulated activities, the focus on dividends returned. If not for the industry's liquidity crisis that followed the Enron collapse, market watchers may have seen other companies raise their dividend rate.

In 2002, 26 companies (40.0 percent) in the industry raised their dividend, with an average increase of 11.1 percent. Only 21 companies (30.4 percent) increased their dividend in 2001 (the lowest percentage of increases on record), and the average 2001 increase was 6.10 percent.

Three companies omitted dividend payments in 2002, the highest number of cancellations since 1989. There were only seven cancellations between 1992 and 2001. Six companies lowered their dividend payments, compared to three in 2001.

The industry's dividend payout ratio—the ratio of the dividend to earnings per share, calculated in this instance without nonrecurring items—was 65.5 percent for the year ended September 30, 2002, up from 53.3 percent during the previous 12 months. This marks only the second year in the past decade that this ratio has risen. That didn't boost total dividend payments, though—there was a 16.9-percent drop in net income during the same period.

Given the decline in stock values in the broader market and the end of the bull market era, investors once again crave dividends, at a time when shareholder-owned electric companies are focusing on core business and stable returns. Some companies with liquidity issues have gone so far as to borrow to maintain their dividend payments. The electric utility industry maintains the highest payout ratio compared to other major sectors.

CHANGES IN HEATING FUEL USE
The types of fuel people use to heat their homes have changed significantly over the past 60 years. According to the U.S. Census Bureau, and perhaps not surprisingly, the most dramatic change has been from households that use oil and coal for heat to those using natural gas and electricity. The most impressive growth was in the use of electricity, which climbed to 30.4 percent in 2000 from 1.8 percent in 1960. In 1940, 11.3 percent of U.S. residents used utility gas; today more than half use gas. Likewise, in 1960, 32.4 percent used oil for heat, while today only 9.0 percent do.

CHANGES IN HEATING FUEL USE The types of fuel people use to heat their homes have changed significantly over the past 60 years. According to the U.S. Census Bureau, and perhaps not surprisingly, the most dramatic change has been from households that use oil and coal for heat to those using natural gas and electricity. The most impressive growth was in the use of electricity, which climbed to 30.4 percent in 2000 from 1.8 percent in 1960. In 1940, 11.3 percent of U.S. residents used utility gas; today more than half use gas. Likewise, in 1960, 32.4 percent used oil for heat, while today only 9.0 percent do.  Fuel type  2000  1980  1960  1940  Utility gas  51.2  53.1  43.1 11.3  Electricity  30.4  18.4  1.8  –  Oil  9.0  18.2  32.4 10.0  Bottled gas  6.5  5.6  5.1  –  Coal  0.14  0.6  12.2  54.7  Wood  1.7  3.2  4.2  22.8  Solar  0.04  –  –  –

SARBANES-OXLEY: VIEW FROM THE TOP
The Sarbanes-Oxley Act, passed last year largely in response to U.S. corporate and accounting scandals, requires company executives, boards of directors, and independent auditors to take specific actions to achieve greater corporate accountability and transparency. The intent of the law was to help restore public trust in U.S. business and corporate reporting.

Implementation of the Act has resulted in changes in controls and compliance practices at the majority of large U.S. multinational companies, according to a Pricewaterhouse-Coopers study. But most executives at those companies doubted that the new law in and of itself will restore investor confidence in the capital markets or aid their companies' ability to create shareholder value.

Most (84 percent) said the Act has changed control and compliance practices in their company, but just 4 percent cited significant changes—27 percent cited modest change, and 53 percent said the new law simply formalizes what their company has been already doing. A good 82 percent were confident their company is in full compliance, while 13 percent said they had more to do.

The respondents in the study found modest initial costs in complying with Sarbanes-Oxley: Only 3 percent say it has been very costly to implement, and 29 percent somewhat costly. In contrast, 46 percent say implementation has not been particularly costly, and 15 percent not at all costly. But 71 percent believe that long-term costs will increase.

There was a direct correlation between executives' outlook on the cost of implementing the law and their evaluation of it. Only 31 percent of those worried about higher future costs gave the law a positive overall evaluation, while 70 percent of those who see no future cost impact approved of the law.

While 31 percent of executives said the Act will restore public confidence in the capital markets, 50 percent said the law will have no impact in itself (19 percent were uncertain). Among those expecting Sarbanes-Oxley to bolster confidence, 3 percent anticipate it will have a major influence, 19 percent a moderate impact, and 9 percent a small one.

In terms of their company's ability to increase shareholder value, 32 percent said the Act will have a positive impact, while 56 percent expected it to be neutral, and 6 percent, negative.

About two-thirds (65 percent) of the executives said Sarbanes-Oxley presents increased risk for their CEO, chief financial officer (CFO), and other key executives required to certify the company's financial reports—17 percent said they face much higher risk, and 48 percent generally higher risk. Only 2 percent expect lower risk, while 32 percent perceive no real change.

Who's leading the Sarbanes-Oxley compliance effort in companies? According to a Deloitte Consulting/Business Week survey of executives concerning the role of the CFO, the answer is unclear. The survey reveals that 63 percent of CFOs believe they are responsible for complying with the new corporate governance regulations: Only 13 percent of them think the CEO assumes this role. But only one in three CEOs and 30 percent of board members believe the CFO leads the effort. Almost half of the CEOs surveyed (47 percent) say they are in charge—and 40 percent of board members agree with the CEO.

Respondents believe that, historically, the CFO has been more of a steward (with authority over financial processes) than a strategist (formulating and executing growth strategies)—and most agreed their company would benefit if the CFO played a strategic role to help set the course of business performance. Nearly half of CEOs believe that the CFO should ideally be a strategist, but only 35 percent of CFOs see it that way—47 percent of them seek a "balanced" role, and 18 percent see themselves as ideal stewards. But all in all, everyone agrees that the current regulatory environment encourages the CFO to play the steward.

"Senior management simply isn't paying as much attention to energy use now," says Nicholas Lenssen, author of the study. He points out that electricity prices stabilized, California's problems in 2001 neither continued nor expanded beyond the state, and the economic slowdown and its constraints on spending have pushed other issues to the fore.

Still, a small number of companies remain concerned about energy and are very knowledgeable, according to Primen. The firm estimates that there are 1,700 large establishments in the United States and Canada, representing 1.6 gigawatts of load, that are strong near-term prospects. Industrial sites with heat-recovery potential are among the groups with the strongest interest—and the reason is, according to Primen, that their key concern is saving money, not averting outages.

For more information on the study, visit www.primen.com. 

How does information about the sun inform climate change sciences? Solar radiation—the incoming x-ray, ultraviolet, visible, near-infrared, and total solar radiation—dominantly impacts Earth's ecosystem and all its physical, chemical, and biological processes, according to UC's website. By measuring the sun's output with radiometers, spectrometers, photodiodes, detectors, and bolometers (devices that monitor heat radiation), the satellite will help scientists model the sun's output and predict its effects on Earth's atmosphere and climate.

The SORCE satellite, here carried by the Pegasus XL vehicle prior to launch, will gauge solar radiation while orbiting Earth.

"We are interested in understanding the sun's influence on Earth's atmosphere and climate so that we can more reliably determine how humans are changing the environment," according to Gary Rottman of the University of Colorado. "We need a long-term record of the natural variation in Earth's climate, including changes in the sun, land, and sea surfaces, to hang our hat on in order to model future climate change."

CULTURE CLASH
Companies in the United Kingdom appear to be ahead of their American and continental European counterparts in terms of corporate disclosure, according to a recent report, "Full Disclosure 2002," by Shelley Taylor & Associates, a British consulting and publishing firm.

U.K. companies, said the firm, have the best annual reports, while the highest ranking U.S. annual report is Citigroup's, which ranks 10th. And not a single European country made it into the top 30 in terms of corporate governance, as rated by the firm. Four out of five top companies for corporate governance are British, while all the bottom 10 are European. In addition, U.K. and European social reporting are more developed than U.S. practices. (Eight of the bottom ten in the social reporting category are American.)

"Voluntary disclosure has deteriorated at a time when it is most critical," said Taylor, president of the firm. "Full Disclosure 2002" claims that British companies have the best annual reports because "they generally provide a high level of operational, governance, and social reporting."

The companies with the best annual reports were GlaxoSmithKline, bt, Vodafone, AstraZeneca, and Aviva. The companies with the worst were UBS, Tesco, Berkshire Hathaway, Deutsche Telekom, and Kingfisher.

The report's findings were based on 300 evaluation criteria gathered through interviews with money managers worldwide. Here are some other findings:

REALLY CLEAN COAL
Last February, on the same day President Bush's Clear Skies Act was introduced, Secretary of Energy Spencer Abraham announced plans to build a prototype of the "fossil fuel power-plant of the future"—a $1 billion venture that will combine electricity and hydrogen production with the "virtual elimination of harmful emissions, including greenhouse gases."

According to the Department of Energy (DOE), virtually every aspect of the 275-megawatt plant will use cutting-edge technology. Rather than traditional coal combustion technology, the plant will use coal gasification, wherein the coal's carbon is converted to a synthesis gas made up primarily of hydrogen and carbon monoxide. Those gases will react with steam to produce additional hydrogen and a concentrated stream of carbon dioxide (CO₂). Initially the hydrogen will be used as a fuel for electric power generation or as a feedstock for refineries.

Sulfur dioxide and nitrogen oxides would be cleaned from the coal gases and converted to useable byproducts such as fertilizers and soil enhancers. Mercury would also be removed. Captured CO₂ (at a 90-percent rate) will be separated from the hydrogen and permanently sequestered in a geologic formation. Candidate reservoirs include depleted oil and gas reservoirs, unmineable coal seams, deep saline aquifers, and basalt formations.

Although current plans call for designing and building the plant over the next five years, and then operating it for at least five years beyond that, DOE envisions the project serving as a test bed for new technologies well into the future.

The Energy Department will ask the power industry to organize a consortium to manage the project and provide at least 20 percent of the costs. DOE believes that the prototype plant would be a stepping stone toward a future coal-fired powerplant that not only would be emission-free but would operate at unprecedented fuel efficiencies. Technologies that may be future candidates for testing at the plant could push electricity generating efficiencies to 60 percent or more—nearly double those of today's conventional coal-burning plants.