March 2009 Archives

The unofficial White House rejection of a blanket offshore drilling ban notwithstanding, some members of Congress continue to fight the battle.

The most recent salvo was fired without fanfare by eight seacoast Democrats. Titled the Clean Ocean and Safe Tourism Anti-Drilling Act , H.R. 1693 would restore the permanent Congressional moratorium on drilling off the Mid- and North Atlantic coasts.

Cherry trees are not the only thing springing to life this season in metropolitan Washington. The electricity industry is set to witness a technological blossoming of its own with the launch of the Nodal Exchange.

Based in suburban Vienna, Virginia, the Nodal Exchange describes itself as the first independent electronic exchange for forward locational power trading.

The concept of Nodal has been in the works for the past few years, and the exchange is expected to go live in early April. But its seeds may have been planted nearly a decade ago, when electricity restructuring was just beginning to grow.

The longer the country goes without a national standard for renewable power, the more individual states set their own, adding what they will, and the more difficult unanimity country-wide appears.

Lawmakers in Washington and Montana, for example, are considering expanding their renewable portfolio standards to allow incremental hydropower upgrades, among other things. It appears to be a real conflict in Montana, but in Washington Governor Christine Gregoire appears to have helped smooth out a compromise that so far looks acceptable to many.

In tune with the new Washington administration, the PJM Interconnection has its hands in the electric vehicle arena. It is a member of and has been working with Magicc to develop communication protocols that will enable plug-in EVs to receive information from the power system and react to changes in electricity demand, i.e., to become a real part of the wholesale grid. Magicc is the Mid-Atlantic Grid Interactive Car Consortium.

PJM could not find a more enthusiastic champion than its very own regulator, the Federal Energy Regulatory Commission, whose new chairman, Jon Wellinghoff, has been a vocal advocate for the plug-in electric vehicle cause. He participated in a summit not long ago with PJM, the Electric Power Research Institute and Magicc, where he said a PEV could nearly pay for itself over 10 years by selling the power during the day that it had stored at night.

The CO2 market design dance gets livelier.

House lawmakers planning to introduce a cap-and-trade bill soon are looking closely at a proposal to give some CO2 emission allowances free to regulated utilities, a congressional aide said Monday. This approach to allowances would move House policymakers much closer to utilities' position on the matter.

But also Monday, two "Blue Dog" Democrats proposed a CO2 market bill of a different stripe. Not really a cap-and-trade bill, this one would create a board of advisers to determine annually what emission credits should cost in order to achieve emissions reduction targets. The Safe Markets Development Act appears to be based on a proposal by the veteran Center for Clean Air Policy.

Interesting numbers from Deutsche Bank carbon market analyst Mark Lewis this week. At Point Carbon's Carbon Market Insights conference in Copenhagen, he said building nuclear plants in the EU would be the least expensive new-build power source if CO2 allowances are valued at 35 euros a metric ton or more between 2013 and 2020. The 35 euros is about $46 right now. EU allowances are now selling in the 11-13 euro range.

News flash from the UK: One of the original promoters of that country's power market privatization now thinks it has not delivered what he thought it promised. He wants more government in it now, he wants a government buying agency, and he wants more long-term contracts.

'Fun' is not a word most associate with futures and derivatives regulation. The very idea conjures up visions of government suits with dark glasses and top-secret briefcases, or of pasty-faced nerds aglow with the illumination of multiple computer screens, as they pore over millions of trades in hopes of finding one may have the taint of manipulation or fraud.

Enter Bart Chilton, who the mainstream press has at times dubbed -- in what may be the understatement of the year -- "outspoken." He's not what one pictures when imagining the typical futures regulator. He sports his hair defiantly longish and wears western boots to commission meetings. And he is certainly notorious among the press for his famous "Chiltonisms."

The Democratic Party-led Washington state Legislature the other day surprised many when it killed cap-and-trade legislation because of fears that voters would oppose a CO2 emission reduction scheme that might hurt the economy and might be vulnerable to "rip-offs."

In covering the story, a Seattle Times reporter dutifully spoke with all the players involved, but concluded his March 16 story with a comment from Clifford Traisman, a lobbyist for the Washington Environmental Council, a group that had strongly supported the bill. After acknowledging why the bill was defeated, Traisman said, "We're changing from a fossil-fuel dependent economy to a carbon-reduction economy. That scares people. Does anyone doubt that we have to do it?"

Those wild and crazy guys at Houston energy investment shop Tudor Pickering Holt have their own NCAA basketball bracket pool organized on CBSSportsline -- and for them, it's about more than just hoops. It's about natural gas.

In past years, members of Congress were frequent speakers and attendees at the Futures Industry Association's annual March meeting in Boca Raton, Florida, where panel participants spend part of the day discussing trading trends or industry concerns before adjourning for a round of golf or a lounge chair on the beach.

Not this year.

When the White House flips parties after an election year, dramatic change in the makeup and tenor of executive branch agencies is standard stuff.

True to form, these past few months in Washington have brought a new and welcome environment of relatively free access to regulators and policymakers. Journalists would have to call that a breath of fresh air.

A case in point is the US Federal Energy Regulatory Commission.

The Obama administration is well past its transition period, and -- in case anyone missed the news earlier this week -- the Edison Electric Institute is making a transition of its own.

One might have thought EEI at something of a disadvantage in this super-Democratic administration and Congress. Longtime EEI President Tom Kuhn was a big Bush backer, a "Pioneer" who raised at least $100,000 for George W. Bush. But EEI, facing what Kuhn accurately called "a time of virtually unprecedented challenge and opportunity," has made what might be a really brilliant move. It has brought on board someone from the really very close-in ranks of House Democratic leadership.

We didn't know there could be another place in the energy sector where someone would be calling for an investment tax credit -- of course we just hadn't been thinking -- but yesterday the president of GE Energy's water and power business, Stephen Bolze, said industrial customers have told the company that an ITC of 30% would impel much more reuse of industrial water. And as drought continues to plague big areas of the country, the question of water use in the energy sector is a big issue, and growing power demand would mean growing water use -- especially if the demand was filled by coal and nuclear plants.

Testimony in a Senate committee put eye-opening numbers on the situation. Nearly 40% of the country's water withdrawals are used for power generation, to cool power plants and produce energy, according to Peter Gleick, president of the Pacific Institute. Most cooling water isn't "consumed," of course, he told the Energy and Natural Resources Committee, but still, it strains regional supplies and it has impacts on local bodies of water.

A march on the nation's capital to push for fundamental change -- it sounds like the 1960s.

That is, if protest marches back then were sponsored by the power company and the car salesmen -- and you never had to leave the rec room.

Oil bajillionaire T. Boone Pickens said Tuesday that he is organizing a March on Washington for Energy Independence to urge Congress to take action now to reduce the country's reliance on foreign oil. Pickens is urging supporters to "virtually" march by phone, fax or e-mail to their local congressperson's office in support of the Pickens Army and its goal of energy independence.

The growing US gas supply glut isn't stopping a coalition of labor and business leaders in Oregon from demanding access to more supply.

Energy Action Northwest has launched a public campaign to get state officials -- many of whom have been opposed to construction of new LNG terminals on or near the state's coastline -- touting the need to import more gas from abroad.

This despite a gas supply/demand imbalance that has driven gas prices in Oregon and elsewhere to their lowest levels in years, prompting producers to cut drilling and causing at least two LNG importers in North America to seek permission to export the fuel instead.

Ten years ago, everything began to change in the power sector. Now there are signs that some things are changing back. In Texas, at least. Witness the once pure merchant company, NRG Energy, reconstituting in large part the former utility in Houston.

Against a backdrop of industry deregulation, in 1999 three local utilities in the upper Midwest -- one was Northern States Power in Minnesota -- were grouped together under a holding company that was given, as was customary at the time, the rather vague name of Xcel Energy. Some of Xcel's generation assets were then hived off, and a new merchant firm was created, called NRG Energy.

Peter Orszag, at least, is putting the Obama administration right out there for a battle over carbon dioxide allowances. Speaking to the House Budget Committee today, he defended the administration's proposed budgeting of 2012 revenues from an allowance market in which all allowances are auctioned. None allocated free of charge.
"If you didn't auction the permits, [it] would represent the largest corporate welfare program that's ever been enacted in the history of the United States," he said.

Even though Duke Energy's chief executive, Jim Rogers, disagrees with that view, he had conciliatory words today for the administration's proposal. "Actually, I think we'll have a more honest conversation faster as a consequence of it," said Rogers in an interview with our colleague Cathy Cash after a talk on containing costs at the US Climate Action symposium on Capitol Hill. "I think what he's done is a good thing."

The smart grid may be only in the underachiever phase for longer than some might be thinking, even though the Obama administration is putting billions toward it, and promising jobs and savings in connection with it.

Patrick Gallagher, deputy director of the National Institute of Standards and Technology, told the Senate Energy and Natural Resources Committee Tuesday that "there is a bit of a jam right now" in figuring out which standards are most urgent to move on, and he said the organization hoped to have initial drafts of roadmaps ready this summer. Initial drafts of roadmaps.

It may be viral marketing, or it may be happenstance. But it is interesting that proponents of the single-price auction that regional power markets operate are having to fight off attacks right now in two states: New York and Texas.

The American Public Power Association has waged a campaign for a couple of years against some of the ways regional markets are structured. The single-price auction, in which all suppliers receive the highest successfully bid price – commonly from natural gas-fired power -- has been the major object of APPA's complaint, which has been joined by the big industrials in the Electricity Consumers Resource Council as well as, at times, a slew of general consumer-interest groups.