You've heard talk lately about the convergence of electricity
and natural gas. That idea has grown as commodity markets have
matured for gas and emerged for bulk power. Energy players can
lose a lot more than their shirt if they fail to model
transmission losses properly. It's no secret that the delivery
of electricity from the generator plant to the end user causes
energy losses in the power system. Since 1960, losses typically
have ranged from 8.5 percent to 10.5 percent of total generation
annually. If the national average retail price for electricity
is used, these losses have a value of $25 billion-a staggering
sum that evaporates into thin air if not properly modeled,
tracked, and accounted for. However, a close look at the
information technology (IT) platforms of power marketers, off-
the-shelf transaction management systems, and IT systems used by
energy service providers shows that loss modeling in many of
these product suites is very rudimentary, if not non-existent.
Each market has its own methodolo