Cambridge Finance Partners has participated in a number of high-profile assignments in the rapidly changing electricity industry. For example, we served as consulting experts to a Fortune 100 energy company in litigation related to the California electricity crisis; assisted a major merchant energy company with the design and evaluation of alternative hedging strategies for its generation assets; and developed benchmark cost of capital measures for a Fortune 100 energy company investigating divestiture and acquisition strategies. Many of the tools and frameworks that we have used to analyze electricity markets can easily be adapted to analyze other energy markets.
Valuation of a Terminated Forward Power Contract
In a dispute between a major power generator and an investor-owned utility, CFP’s Dr. Fenn, working with the law firm of Simpson Thacher, offered testimony regarding the valuation of a large forward power contract that had been lawfully terminated. Over the course of a one week arbitration in Los Angeles, CA, Dr. Fenn testified for nearly 6 hours before retired federal judge John Martin.
Evaluating Contingent Debt
During the 1970’s many coal-fired electric utilities and coal suppliers entered into long term supply contracts many of which lasted for decades. In the context of a corporate restructuring involving the sale of a coal mining subsidiary, CFP was asked to assess the risks that the contract terms of a long term coal supply contract would not be met. …read more
Analysis of Market Manipulation
The California electricity crisis of 2000 and 2001 was reputed to have resulted from the gaming of a partially deregulated California energy system by energy companies such as Enron and Reliant Energy. The energy crisis was characterized by a combination of extremely high prices and rolling blackouts. Due to price controls, utility companies were paying more for electricity than they were allowed to charge customers, forcing the bankruptcy of PG & Electric and the public bail out of Southern California Edison. CFP was hired by Duke Energy to conduct an extensive 2-year analysis of all aspects of the Western energy markets …read more
The Economic Relationships between Parent and Subsidiaries
Cambridge Finance Partners was asked to analyze the relationships between PG&E and its subsidiaries during the period following deregulation in 1996. …read more
Privatization of Electric Utilities in the UK
The United Kingdom led the way with broad privatization of all public sector enterprises including electric power generation, transmission and distribution. Along with Professor Dyck, Dr. Cragg conducted a three year study of the effects of privatization on UK electricity, telecommunications, transportation and utilities sectors. …read more
Southern Company
Deregulation of the energy sector led to new market and ownership structures for generation, transmission and distribution. Dr. Cragg analyzed various issues related to Southern Company’s choice of capital structure as it investigated alternative divestiture and acquisition strategies. …read more