April 2009 Archives

According to John Hofmeister, the US needs the energy equivalent of a Federal Reserve Board, a super-agency that sets and implements long-term energy policy for the country.

''The volatility we have seen, the increasing dependence we have seen as a nation, the increasing questions about affordability and availability in the future -- it calls for a different mechanism,'' the founder and CEO of Citizens for Affordable Energy said at a Washington energy marketers conference. ''Thirty-five years of failed strategy ought to teach us a lesson, and it becomes important to move on from the lessons learned. And political time will not solve the problems we face in energy time.''

Acknowledging conversations with such natural gas advocates as billionaires T. Boone Pickens and Aubrey McClendon, his cross-town rival at Chesapeake Energy, Devon Energy CEO and American Petroleum Institute Chairman Larry Nichols said Tuesday that compressed natural gas is a better vehicle transportation fuel than ethanol.

Gas is "the only alternative," Nichols said at the Platts Energy Podium in Washington, DC, making it clear that he really doesn't like ethanol much.

Last week, you read here about a high-tech, compressed natural gas-powered lawnmower. This week, there's some CNG news that might interest race car fans.

Volkswagen said a pair of CNG-fueled Sciroccos will tackle the Nürburgring -- a 24-hour endurance test set for next month. Called "the Ring" by enthusiasts, the 70-mile track in the Eifel region of Germany is considered the toughest, most dangerous and demanding purpose-built race track in the world. (Clearly these folks haven't been on some West Virginia roads.)

Edward Finklea thinks it's time for a reality check.

The executive director of Energy Action Northwest, a business and labor coalition, wrote a forceful op-ed piece today warning residents and policymakers of Oregon and Washington not to dismiss a host of proposed natural gas infrastructure projects planned for the region — or they'll live to regret it.

''We have committed to The Great Energy Reality Check of 2009, a comprehensive program designed to engage and inform that we hope will allow citizens and elected officials to see the truth of our energy dilemma,'' Finklea said. ''Energy Action Northwest has embarked upon a year-long effort to bring truth and clarity to the energy debate.''

When it comes to promoting the use of alternative energy, people like billionaire oilman T. Boone Pickens like to think really, really big. Others prefer to start in their own backyard -- quite literally.

This week, the world’s first natural-gas-powered lawnmower was rolled out to the public at the Alternative Fuels & Vehicles National Conference & Expo in Orlando. According to the folks at NGV Global, who are pressing for expanded use of natural gas vehicles, the Dixie Chopper Eco-Eagle is meant largely for commercial use, cutting 5 1/2-foot-wide swaths of grass at the rate of eight acres an hour.

Jon Wellinghoff is not being shy about his vision for power supply. The new chairman of the Federal Energy Regulatory Commission, a big promoter of the smart grid, demand response and renewables, believes the US may never see another new nuclear or coal plant.

The question right now may be no more than theoretical, he said at a United States Energy Association press briefing this morning, since costs are too high -- nuclear costs he cited as roughly $7,000/kW and advanced coal as similarly daunting. But even in the long term, Wellinghoff suggested, these traditional baseload sources may just not be needed.

In fact, our colleague Chris Newkumet reports, Wellinghoff said the very notion of baseload capacity may be "an anachronism."

PSEG Group's chief executive, Ralph Izzo, persists in his belief that an electric utility can be something different from what it's been before. Whether he succeeds in persuading New Jersey regulators and policymakers that his newest idea deserves backing, who knows? But it's pretty inviting at first blush.

Don't leave it to me, the homeowner, to get around to replacing my refrigerator and my air conditioner, my light bulbs and everything else with more efficient ones, Izzo proposes. Make it the utility's job, the utility's business.

It's no surprise that Thomas Skains, chairman of the American Gas Association, is actively pressing federal policymakers to allow increased US natural gas production as a way to wean the US off its dependence on foreign oil. But Skains also thinks gas consumers have a much bigger role to play in that effort -- if only they had the information they needed.

In an entry on CNBC's blog, Skains, also president and CEO of Piedmont Natural Gas, cited a recent survey showing that more than 93% of Americans think it's important to use less energy at home -- but fewer than half of those surveyed buy energy-efficient appliances/insulation. ''Americans want to be a part of the solution, but they just don't know how,'' he asserted.

Commissioner Suedeen Kelly appeared to suggest yesterday that the Federal Energy Regulatory Commission doesn't need any new authority, after all, to push transmission buildout. FERC has asked for much stronger permitting power and Congress is considering it; the 4th Circuit US Court of Appeals has rebuffed FERC's effort to get power to override states' denial of transmission projects (see previous post.) But Kelly said at the Deloitte Energy Conference that the commission may have enough authority already to leverage public and policymaker desires for green energy and economic development, and "the problem child of transmission might be able to be addressed."

It was possibly surprising today when the 4th Circuit US Court of Appeals said it would not rehear the decision a three-judge panel issued in February rejecting the Federal Energy Regulatory Commission's interpretation of its transmission-permitting authority.

The February ruling was not unanimous, perhaps leading FERC to think there was a chance the full bench would reconsider it. But not so. The commission told our colleague Craig Cano today that FERC has not decided what to do now; it's hard to figure if an appeal to the Supreme Court is in the offing.

Affordable solar roofs, windmills that fit in neighborhoods or large yards ... other distributed energy sources that may come down in price. These could make real inroads on utilities' traditional business if the technologies really take hold as some inventors and visionaries dream. Combined with truly interactive smart grid developments, these things would change the nature of utilities. Improbable right now, the idea is nevertheless intriguing, and one blogger makes an interesting suggestion for the business model if the time comes: Utilities could be like banks. But cool, in a geeky, IT-genius kind of way.

Other than requiring us to get passports to visit our Houston bureau, (not an insurmountable obstacle for Platts, we have bureaus all over the world, and a T&E line item for visas and passports), what would be the energy effect of Texas seceding from the United States, as Republican Governor Rick Perry suggested this week?

Small farmers are fed up with the seeds of "unregulated speculation on commodities" and "corruption and manipulation" being sown at the Chicago Mercantile Exchange, the parent of NYMEX and CBOT.

Marking the International Day of Peasant's Struggle today, the National Family Farm Coalition, in connection with grassroots activist group La Via Campesina, will take to the streets of Chicago outside CME's headquarters to protest the role of speculation in the dramatic rise of food prices.

The Wires group today urged the Federal Energy Regulatory Commission to be stronger and more consistent in promoting a build-out of the transmission system -- at least until Congress enacts some new, more centralized, transmission planning and siting regime. (That is if Congress is able to agree on a regime. The forces seeking more federal, or at least more regional decision-making are strong, but states and utilities wary of it are also strong.)

Wires is the Working Group for Investment in Reliable and Economic Electric Systems. In a statement today, it lamented the New York Regional Interconnect's decision earlier this month to withdraw its state application to build the 190-mile line it wants to put from upstate to downstate. NYRI's reason was FERC's refusal to change a New York Independent System Operator rule requiring 80% of system stakeholders to approve a project. Since some important stakeholders oppose the project, NYRI knew it did not have a chance.

The announcement that Russia's Gazprom will begin shipping liquefied natural gas to North America starting later this year appears to have struck a raw nerve with gas producers in the West.

In a fiery news release last week, the Independent Petroleum Association of Mountain States called the LNG deal ''a dangerous development for US energy and national security'' and warned that it could be ''devastating'' to domestic gas producers, which will have to compete with foreign gas in an already-oversupplied market.

The sentiment is not all that surprising given that producers are dealing with gas prices at six-year lows as demand for power generation, industrial operations and home heating are stagnant or falling. But does the strong, agitated language represent something else at work?

In the cyber world last week, there was a lot of OMG-ing after the Wall Street Journal published its article about cyber-spies having hacked into the US power system and left software systems behind in it. The cybersecurity world was underwhelmed.

IT and cybersecurity-expert bloggers, some of whom follow security of the power system along with numerous other systems, observed that power grid vulnerability is hardly news. Real, yes, but not more real last week than last year or the year before, when it was big public news too, after a project of Homeland Security and other groups destroyed a generating unit by computer manipulation. One web site cited another's suggestion that the Journal story could have been planted by people eager to get Congress cracking on a cybersecurity bill:

As President Barack Obama and some of his White House staff send more and more signals that they are open to negotiating away from insistence on auctioning all CO2 emission allowances, House Speaker Nancy Pelosi is doing the same. Maybe some of her motivation comes from a little gift from Jennings Randolph.

Randolph was a gracious, old-school Democratic lawmaker from West Virginia, who with Vermont Senator Robert Stafford led the Environment and Public Works Committee back in the 1980s with that kind of comity that hardly exists any more. Of different parties, they really did appear to work together to find ways of living productively together. According to a Washington Post column today, Randolph gave Pelosi's father something a long time ago that she still keeps in her office: a little statue of a coal miner.

The small mountain town of Rifle has been at the heart of a natural gas drilling boom that has swept across western Colorado in recent years, creating an economic boom in a region once known largely for its sprawling cattle farms.

So what was Colorado's junior US senator doing out in the fields of Rifle this week? Touring local gas drilling rigs? Meeting with landowners about mineral rights?

Nothing of the sort.

Interior Secretary Ken Salazar's choice to oversee use of federal lands for energy development comes with several blog posts' worth of views on energy issues. Ned Farquhar -- "a formidable adversary," according to Jim Simms, president of the Western Business Roundtable -- has been a renewable energy and climate action advocate in the Mountain West for the Natural Resources Defense Council, at whose web site he blogs.

Simms told our colleague Bill Loveless yesterday that "Ned's view of energy policy tends toward the left-most edge on the political spectrum. I think he would agree with that. We have disagreed with him on issues such as transmission and the future of clean coal with carbon capture in the West."

According to a recent Brookings Institution study, the Charlotte region has one of the largest carbon footprints among US metro areas. The faculty and students at the University of North Carolina-Charlotte believe they've seen the light -- literally -- as to how to shed that dubious distinction.

The school's unique Daylighting and Energy Performance Laboratory has begun working with local industry and government officials in hopes of achieving two key goals: reducing electricity usage in buildings, and cutting Mecklenburg County's air pollution.

The US power industry doesn't know exactly where it's going yet, so it's hard to build a bridge to get there. "But that doesn't mean we can't start building the road to the bridge," Federal Energy Regulatory Commissioner Suedeen Kelly says.

Speaking at Platts' 24th Global Power Markets conference in Las Vegas Monday, (its theme is "A bridge to where?") Kelly said the industry knows enough to get started -- more renewables will be deployed, less coal will be burned and more energy efficiency will be implemented. FERC is focusing on transmission, markets, credit and capacity, and a smart grid, she said.

T. Boone Pickens' idea for getting the US off foreign oil requires a crucial step in the road he outlines: switching a lot of vehicles to natural gas instead of oil-based fuels. It is the sometimes-forgotten step in the vaunted Plan. Get off foreign oil by getting lots of power from wind (and presumably solar). Since oil and electricity have little to do with each other, the middle step is shifting from natural gas-fired electricity to wind and solar, and sending the gas to vehicles instead.

Millions of people, including important members of Congress, have signed on to Pickens' vision -- without necessarily buying into the natural gas vehicle part of it. Energy Secretary Steven Chu still isn't signing on, either.

As the little battle boils in New York state over the shape of the Independent System Operator's power auction, across the country in California the ISO has just launched a day-ahead and real-time market much like New York's, and PJM's, and the Midwest ISO's, and New England's. It took a really long time to get there -- recovering from the 2000-2001 power crisis required slogging through years of process, technology and interest-group negotiation. But it seems that the launch pleased a lot of people.

A bill introduced in the US Congress this week to require federal fleet managers to buy thousands of natural gas vehicles mimics efforts to push development of the NGV market in the 1990s, when the government attempted to buy thousands of alternative fuel vehicles each year. For a number of reasons those earlier efforts advanced nearly as much as the NGV industry had hoped -- so what will be different this time?

The efforts began in earnest in the late 1980s, with the passage of the Alternative Motor Fuels Act of 1988, which required federal fleets to acquire "the maximum number practicable" of vehicles using natural gas or alcohol-based fuels.

Last year, a bill in Congress aimed at placing millions of natural gas-fueled cars on America's roads stalled before it even got out of the driveway. But this year things will be different -- or so two members of the House of Representatives insist.

"The bill was introduced late in the session last year," Oklahoma Democrat Dan Boren recalled at a Washington press briefing this week. "And then came the Lehman thing" -- the bankruptcy of Lehman Brothers and the subsequent turmoil that bounced almost every other national issue off Congress' plate.

Like the quarrel between groups at the federal level, the argument in New York about the Independent System Operator's single-clearing-price auction has turned into a game of table tennis.

State Assemblyman Richard Brodsky, who has a bill to get rid of the single-price auction, engaged consultant Robert McCullough to produce a report supporting his view. Consultant Susan Tierney of Analysis Group produced a report opposing his view. Now McCullough has come back with another report.

The ISO's market adviser, David Patton, has told our colleague Eric Wieser that McCullough's work is just "factually inaccurate."

And the winner? The defenders of the status quo are likely to prevail. But it could be that dissidents will be a thorn in their side for a long time.