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Is FERC being too mean to NERC?

Can FERC be too mean to NERC? The Federal Energy Regulatory Commission, that is, with its recent audit of the North American Electric Reliability Corp. Some say FERC's audit was too harsh and too broad. Some even link it to President Barack Obama's "anti-carbon agenda." Whatever is true, the audit has highlighted a power struggle that may be inevitable. Just how much is FERC the boss of NERC?

Everybody knows that coal provides the cheapest electricity in the US and that renewables have a ways to go before they can be cost-competitive without subsidies.

Or do they?

Coalseam gas has been a growing source of supply for Australia, but it's about to come under a new level of scrutiny. It's not just coalseam gas; the Australian government is looking at coal as well. Christine Forster writes about it in this week's Oilgram News column, Regulation & the Environment.

Coal will fuel about 38% of US power supply this year, the Energy Information Administration says this week -- a somewhat dramatic drop of about 10% from last year and double the decline EIA had projected earlier. Natural gas-fired generation, in bold contrast, will rise a whopping 17% or so this year, almost double the increase the agency had estimated.

It goes without saying that the reason is natural gas. The point is brought home this afternoon, when the NYMEX May gas futures contract settled below $2/MMBtu -- at $1.984, the lowest settlement for a front-month contract since January 28, 2002. It seemed so inevitable; the only question has been what day it would happen. So now the ice is broken.

Panels at conference sometimes have outliers, a speaker who doesn't fit in with the overarching topic or the job descriptions of the other speakers. The results can be awkward, but on occasion they can also bring a fresh perspective.

The final panel at Platts 27th Annual Global Power Markets conference in Las Vegas that ended April 3 is a case in point.

Lamentations Monday at Platts Global Power Markets conference about the lack of a national energy policy. There should be one. ... Why can't we just get it together and make one?. ... Accept it, there never has been one and there never will be.

Benjamin Salisbury of FBR Capital Markets brought it all up short.

Now that the Environmental Protection Agency has proposed a regulation describing just what new coal and natural gas power plants must be like with respect to carbon dioxide emissions, one might think utilities and plant developers would have an easier time with long-range planning. The rule might deliver the certainty that executives always say they're looking for. 

But it's not necessarily so.

At a recent conference in London, Hans-Josef Fell, a member of the German parliament and spokesman for the country's Green Party, lit up wry smiles in an audience of otherwise staid electric utility executives when he laid out his party's ambitious energy policy: 100% renewable energy by 2030. Under Fell's plan, Germany would be fossil fuel-free 18 years from now.

Actually, his plan is even more ambitious. Renewables will solve not only energy problems and global warming but, because fossil and nuclear energy are connected to other woes, renewables are also the solution to oil wars, poverty and economic crises, he argued.

Here's just a small reminder of what sort of "education" often needs to be done at state legislatures.