May 2009 Archives

An entirely new agency to regulate the carbon allowance trading program, assuming there is one, would be far better than having existing US agencies deal with it, according to Suedeen Kelly, a member of the Federal Energy Regulatory Commission. The task of regulating the market would be so daunting that it would dwarf an existing agency's mission, she said today at an ICF International energy breakfast in Washington. She also said she hasn't found a taker for her suggestion.

The Waxman-Markey climate and energy bill would charge FERC with overseeing cash carbon allowance and offset markets, while a White House plan would delegate responsibility for carbon derivatives markets to an agency that stakeholders expect to be the Commodity Futures Trading Commission. But "if I were master of the universe," Kelly said, "I'd create a new entity that that would be their sole job, because I believe that is going to be a huge undertaking."

The National Research Council wants the Department of Energy to undertake something tough: Instead of setting new efficiency standards for 15 or so appliances in the traditional way, DOE should take into account all the emissions and inefficiencies of the fuels and processes used to run the appliances.

Whew. First of all, DOE is having to get cracking even to tackle the traditional approach. It's already years late in issuing more stringent standards and has agreed to deadlines for doing so. President Barack Obama asked the department in February to finalize five of them as quickly as possible; these are standards that face deadlines before August 8, for ovens, microwaves, air conditioning units and more.

The economy-transforming investments that a carbon market could bring are much further down the road than some might think, according to remarks by Duke Energy chief executive Jim Rogers. At the World Business Summit on Climate Change in Copenhagen earlier this week, he said during a panel discussion that until a really long-term carbon price projection can be made, long-term business investments just cannot be made.

The energy sector as a whole may be bearish, but there's a flurry of activity these days in the natural gas vehicle market.

Honda Manufacturing of Indiana this week announced that it has begun production of its natural gas-powered Civic GX at its plant in Greensburg. The auto, which has been produced in Asia, is the only NGV built by a major automaker in the United States. It is available for sale in all 50 states and eligible for a $4,000 federal tax credit as a qualified alternative-fuel vehicle.

Any number of interests are speculating on Supreme Court nominee Sonia Sotomayor's position on any number of issues, but our colleague Brian Hansen was in the New York courtroom in 2006 when the US Court of Appeals judge made some revealing remarks about one issue, climate change.

In a case in which a number of states tried to force five electric utilities to reduce their carbon dioxide emissions, Sotomayor was the lead judge. She ended up not having to rule on the case because it was overtaken by another climate change suit, the one that went all the way to the Supreme Court and resulted in the ruling that the Environmental Protection Agency could regulate greenhouse gas emissions. But Sotomayor's statements at the oral arguments were interesting.

Last night as Representative Henry Waxman steered the energy and climate change bill to its 33-25 approval vote, Democrats and Republicans did the traditional congratulating and complimenting of each other that mark the close of many battles on Capitol Hill. But not all of them. And sometimes it seems insincere.

On this occasion, it didn't seem false. Maybe that was just because they all were too exhausted to fake it. Or maybe it was the eye of this beholder, too willing to buy into the idea of an innate sincerity and good will of most of the people who are fighting policy battles.

OK, fine. Naïve. But maybe just eager to suspend the wholly jaded posture for just a few minutes.

Webster's Dictionary defines a derivative as "something that derives from, grows out of, or results from an earlier fundamental state or condition." In financial terms, it is a product that is dependent upon or derives its value from another, underlying product.

But when it comes to the public, 'derivatives' might as well be a four-letter word.

If her two-day tour of Wyoming is any indication, Environmental Protection Agency Administrator Lisa Jackson is not averse to maintaining or even increasing the production of fossil fuels -- even ones that emit significant amounts of carbon.

Jackson, along with Democratic Governor Dave Freudenthal, visited a wind farm near Cheyenne, a coal mine near Gillette and a coalbed natural gas field near Pinedale, according to an EPA description of her tour. "As a home of wind, coal and natural gas, Wyoming is at the heart of America's energy future,'' she said afterward. "I enjoyed our healthy dialogue about the opportunities possible in energy production that do not forsake our environmental responsibilities."

Nuclear power interests have made some progress with members of the House Energy and Commerce Committee. Last night and this morning, they lost two efforts to have nuclear play a major part in renewable electricity standards, but they lost by smaller margins than some might have expected, and the issue is very likely to show up when the full House debates the climate change and energy bill. Whenever that may be, given that health care reform is high on lawmakers' agendas.

Last night's amendment, by Florida Republican Cliff Stearns, would have subtracted all nuclear power from the baseline that utilities will use to calculate the 20% renewables requirement. This morning's, by Michigan Republican Fred Upton, was bolder; it would have allowed nuclear power to be considered a renewable resource.

It seems a little late in the game, after so very many concessions have been made and so much steam appears to have been built up. But not only are the Republicans on Representative Henry Waxman's committee mounting strong arguments against the energy and climate change bill Waxman is promoting, a couple of industry entities are producing arguments against it that go beyond a simple formula aimed at getting more allowances for themselves.

The American Public Power Association and MidAmerican Energy are on or near the same page, it appears, in saying that trying to do low-carbon energy policy and a carbon reduction program at the same time is a bad, expensive idea. They advise doing one or the other. Can such a choice be made now?

It was Bike to Work Day, and Energy Secretary Steven Chu was into it. "I miss riding a bicycle," he told a crowd of hundreds of bike commuters today, moments after dismounting his $5,500 Italian road bike. "My security detail doesn't really let me do it."

It was only the second time Chu had pedaled the roughly eight miles from his Chevy Chase home to downtown Washington, our colleague Derek Sands reports. Not what Chu is used to; he rode to work every day in California.

"Clearly I am preaching to the converted," he told the bagel- and orange-munching cyclists. "It not only saves gasoline, it gets you in great shape."

Who said sex has no place in the power industry? A really strong CEO probably gets that thrill from the work, and John Rowe revealed it today.

At the National Press Club, the Exelon CEO was asked if it was still important to his company, if it wanted to be a national utility, to develop a Texas presence by buying NRG Energy. He'll be 64 next week, he said. "I'm an aging male. Lust is a constant problem."

If the NRG deal doesn't work out, would he be looking at other purchase opportunities? 'I've had a rabid devotion to shareholder value," Rowe said, "and I'll have to learn to keep my lust under control."

About that NRG deal, Rowe said he would sue NRG if its shareholders don't meet soon to consider Exelon's $6 billion hostile takeover bid.

In the push to redesign the US financial regulatory system, some observers continue to tread a dangerous line, particularly when it comes to ferreting out the role of speculators in determining energy prices.

At the Commodity Futures Trading Commission's Energy and Environmental Advisory Committee earlier this week, Raphael Martinez, a member of the agency's market oversight division, said the industry has "reached a point where we just talk past each other, leaving the public confused."

In PBS's version of a steel-cage death match, MacNeil/Lehrer presents a debate on US energy policy tonight, May 14, at 7 pm EST, a two-on-two verbal foodfight on the future of power in carbon form.

Or because it's really a webcast, watch it anytime you want to pop the corn, chill the soda and put on your lucky pro- or anti-energy independence T-shirt from your last Sierra Club or Club for Growth cookout. (Tips on how to get the picture out of the little box of your laptop onto the big screen of HDTV after the jump.)

Jon Wellinghoff continues to clarify and elaborate on what he said two weeks ago that created quite the conversation-starter: There may never be a need for more coal and nuclear plants and baseload generation may be an artifact of the past. As some people said, "this from the chairman of the Federal Energy Regulatory Commission!"

Today Wellinghoff explained himself some more. At a Washington news breakfast sponsored by Access Intelligence and the Compete Coalition, he said he believes electricity markets will decide the future of new coal and nuclear power generation.

Because we in the Washington media hear and write about it almost every day, perhaps we assume that the rest of the country knows exactly what we mean when we talk about a cap-and-trade system for reducing carbon emissions.

Not so much.

A new Rasmussen Reports poll shows that only 24% of registered voters ''can correctly identify the cap-and-trade proposal as something that deals with environmental issues. A slightly higher number (29%) believe the proposal has something to do with regulating Wall Street, while 17% think the term applies to health care reform. A plurality (30%) have no idea.''

Max Bialystock, where are you?

Today the American Gas Association asked for 12% of the carbon allowances in the Waxman-Markey climate change bill to be allocated free to natural gas utilities in the same way that the bill is expected to allocate a big chunk, maybe 40%, to electric utilities.

AGA had recommended earlier that gas utilities get allocations if and when they were covered by Waxman-Markey, which is in the throes of tough negotiations right now in the House of Representatives. But just as we go into the weekend before Representatives Henry Waxman and Ed Markey are to come out with a new draft of their measure, AGA wrote to them recommending the 12% figure, which AGA says would be equivalent to their contribution to total baseline emissions in 2005.

This blog isn't about oil; our colleagues at platts.com blog about oil. But dire climate change scenarios cross all boundaries, and this caught our eye. Before climate change can destroy us with droughts and floods, we could first run short of oil and then consume ourselves in a global war for resources, starting possibly in about five years. This is the opinion of peak oil guru, Matthew Simmons, who said the other day that last year, 2008, can now probably be seen as the final peak oil production year.

Peak oil, of course, is the idea that, at some point, the amount of oil available to meet society's needs begins to decline. New sources will still be found, but they will not be enough, or they will be too inaccessible or expensive, to stay ahead of demand.

While the Louisiana state veterinarian won't confirm a cause of death, 17 cows did die last week in Caddo Parish, Louisiana, in a pasture next to a Chesapeake natural gas well being hydraulically fractured by contractor Schlumberger.

With Congress set to debate removing the exemption of gas wells from the Clean Water Act -- bringing a whole new level of disclosure and environmental impact requirements to shale gas drillers -- the incident may give members of Congress an even bigger bone to pick with the drilling industry.

Jon Wellinghoff can't stop stirring the pot. Not that that's a bad thing for the chairman of the Federal Energy Regulatory Commission; it's just something new for the person in that job.

Last week he made waves by calling the concept of baseload power perhaps an anachronism. This week he suggested that the Texas-only power system, which is outside of FERC's jurisdiction, might do well to integrate more with the rest of the country. At least one blogger found the suggestion intriguing, but said Wellinghoff might want to be a little wilier in his approach.

Take it from Ted Turner and T. Boone Pickens: There would be nothing greater than having big transmission lines on your property.

Easy for billionaire land barons to say, maybe. But on CNN's Anderson Cooper360 the other day they seemed to have made a little Public Service Announcement encouraging landowners everywhere to take a similar view.

Chicago is a wind-power hotbed right now, with the American Wind Energy Association meeting there. But not everybody has both feet on the bandwagon. A columnist at the Chicago Tribune, fully aware of AWEA's event in his city, says the federal renewables mandates that wind power is looking for are too expensive and they are unnecessary. The wind industry is only looking to line its pockets, he says.

Here is the way David Greising started his column:

They have come here by the thousands, to the Windy City, to soak in a belief that wind is the power of the future, and that, just in case others do not see it that way, the law should make it so.

Fifty-five percent of people responding to a Lawrence, Kansas, newspaper poll this afternoon said they were not surprised that only a week after Kathleen Sebelius left the governor's office to become secretary of the US Department of Health and Human Services, Kansas made a deal ending its iconic battle with Sunflower Electric. (A few minutes later the vote tally had moved closer to half and half: Half the people were surprised, the other half not. Alright, there were only 58 voters at the time. Still, they must have been people interested enough to follow the issue.)

The newspaper called today's announcement a "stunning development." It was, whether one was entirely surprised or not. The Sunflower battle has been a kind of flagship case for anti-coal plant interests.

Stan Wise, a 15-year member of the Georgia Public Service Commission, has never apologized for supporting deregulation of the natural gas market in Atlanta Gas Light service territory 10 years ago.

"We have seen a maturing market," he said at a Washington conference this week. "We have seen developments continue to happen in this market -- and it's been remarkable as we go forward. The marketplace has been a winner."

It's not often we anticipate with relish the prospect of an industry conference. But this one has potential to be more than just interesting. The National Association of Regulatory Utility Commissioners and the National Council on Electricity Policy is going to have a December conference on "Utilities of the Future: Implications of a Carbon-Constrained World." From a set of suggested topics for discussion, there's lots of opportunity for truly visionary material, if people come up with some.

Papers are due July 1, and the organizations seem to be urging all kinds of thinking. "How can the existing utility sector, with its varied systems (customer, generation, distribution, transmission), be coordinated and reshaped to ensure the most effective delivery of services in the future?" That's one question of many they suggest.