Are toxic assets poisoning your utility’s supply portfolio? Do you care?
There is a whole lot to be said about this subject – and it can’t all be covered in a single post. So I’m going to keep this one brief and simple.
Let’s start with some fundamentals. Go watch this nine minute video by Paddy Hirsch, a senior editor at marketplace.org. He provides an excellent description of what toxic assets are (and what mark-to-market means) by using a wine collection metaphor. It totally works. And Paddy totally rocks, as they say.
He’s talking banks, in the context of today’s financial meltdown. But in your mind, replace bank with your utility (Meralco, Veco, your coop, whatever) and replace MBS and CDOs with power supply contracts from IPPs and TSCs. This ‘case of wine’ paradigm works beautifully for us.
More to come.