Powerful thoughts15 June 2001
Experience gained by independent power producers is proving to be a valuable asset for the National Hydropower Association in the US. Suzanne Pritchard reports
Independent power producers (IPPs) have played a key role in the restructuring of the US power industry over the past 20 years. So to head the hydro power industry’s national trade association with presidents who have knowledge of IPPs is a very clever move.
Chris Hocker, vice president of business development and corporate affairs at CHI Energy in Connecticut, stepped down from his role as president of the national-hydropower-association (NHA) on 24 April 2001. Although his company, CHI, has branched out into other renewable technologies, for the past 16 years the focal point of its operations has been small hydro. ‘Hydro is my first industry,’ he says. ‘And small hydro has definitely been the stalwart face of the company.’ Stepping into his new role as president of the NHA, Hocker’s successor is Phil Dutton, vice president of United Amer-ican Hydropower Corp in New Jersey (the hydro power business unit of United American Energy).
‘We started out as a hydro IPP,’ Dutton says. ‘We developed five projects through to 1989, but then changed our focus from building hydro projects to recovering those in trouble. The low energy rates of the 1980s and 1990s created a situation in which many projects ended up with utility contract problems and/or operating deficits, and consequently became ripe for acquisition. We established a respectful reputation, working with the lenders on many troubled projects.’ ‘To have an IPP perspective at the NHA is very useful,’ says Hocker. ‘Most hydro in the US is government or utility owned and so we have a little more appreciation of markets and competition. To some extent, this has shaped my view on how the NHA must respond to market conditions and is a reason why we created a new markets committee.’ The markets committee was set up in response to market entities which are being formed in parts of the US. Such changes are reflected in the membership of the NHA, which looks very different to how it did three to four years ago.
‘We now have a lot of members who used to be with utilities but are now in companies that were spun off or divested by the utilities. They’re now like independent, stand-alone generators,’ Hocker says. ‘PG&E National Energy group, Orion Power and the like did not exist five years ago, but they’re not like the IPPs where Phil and I come from. It really is a whole different kind of entity.’ David Tuft, NHA’s director of public affairs, adds: ‘This year the NHA has dealt with market incentives and the cost of power quite a lot. It has been much easier to call these guys [Dutton and Hocker] and say “so what does it cost per megawatt to develop and build a project?” – as these guys are doing it for real.
‘In terms of NHA policy, to have folks who have been in the market and faced real-life competition scenarios has helped us to come up with realistic incentive programmes which we can take to the Hill and, hopefully, incorporate into viable proposals for hydro power.’ Hocker believes it is important for the hydro industry to be aware of market issues if it is to secure its place as a significant generation resource. He describes the markets committee as a good service for NHA members as it will help them understand how market rules are established, appreciate the value of green power, and understand how to market it.
Another member service recently established by NHA is the newly adopted hydraulic power committee: originally under the auspices of the Edison Electric Institute.
‘Edison’s focus changed and they were channelling less internal resources into the committee,’ Hocker explains. ‘So they looked for other potential places where it would be able to flourish. NHA believes the decision to take on the hydraulic power committee is an opportunity to attract plant managers and operations supervisors to the association. It will make us more broadly applicable to more people in any one given member company.
‘In my company, for example, there are certain people who will not come to NHA conferences as they don’t consider themselves to be political guys but have more of an interest in the mechanics of hydro power. We’ve now got people at the NHA who speak more of their own language and deal with their issues.’ The ability to adapt to such changing requirements is something that Hocker and Dutton believe must be reflected by players in the power market. ‘IPPs are full of entrepreneurs,’ says Dutton. ‘And the movement in the power industry from utilities to deregulated entities means that there is room for more entrepreneurial organisations.’ ‘The distinction between IPPS and utilities is getting less and less all the time,’ Hocker adds. ‘We’re all moving in the same direction but to different places. Successful utilities will be those that instill entrepreneurship in their people.’