August 2009 Archives

"[B]rave actions and strong leadership have often succeeded in overcoming seemingly impossible barriers."

Indeed they have.  We must be talking about something deep: conquering disease, rescuing damsels, overthrowing despots. But no; it's "de-carbonizing the power system," and more specifically, getting transmission built to modernize the grid and allow creation of a clean-energy future.

Whenever proposals to change regulatory rules surface, they're almost guaranteed to meet the same reaction from both sides of the argument. Go too far, and you run the risk of driving driving away market liquidity. Don't go far enough, and fraud and manipulation will run rampant.

But these concerns hardly stack up to the warnings of one Michael Manley, who wrote the Commodity Futures Trading Commission during its recent comment period on energy position limits.

Barclays Capital says power demand has dropped this year for residential and commercial consumers for the first time since complete national data about it became available in 1973.

"There used to be one reassuring maxim in the power industry," a Barclays commodities research report says. "Residential and commercial power consumption grows through good times and bad." But this bad time is unlike all the others.

Our colleague Mark Watson reports that some industry experts see the stressful economy as the main reason; their consumption will go back to previous levels once money is not such a problem. Others think "green" consciousness and energy-efficient products are producing a more permanent effect.

"It's always something," Roseanne Roseannadanna used to say. "If it's not one thing, it's another." Wind power knows something about that.

Now the Associated Press says weatherpersons are raising the latest thing to join the list of hazards and complaints pertaining to wind farms. Birds, bats, sage grouse, horrible hums. It appears now that wind turbine blades can look on Doppler radar like storms or even tornados.

If a hedge fund doesn't hire Brian Hunter, the former Amaranth Advisors trader who helped blow up the fund to the tune of $6.5 billion when his calendar-spread bets went south, some university should probably hire him as a professor.

On the witness stand this week at the Federal Energy Regulatory Commission's hearing on his alleged market manipulation (the trades in question had nothing to do with the fund's later collapse), Hunter has taken the room to Brian's School of Gas Futures Trading.

It was jarring to see the NYMEX front-month natural gas contract fall below the $3/MMBtu mark the same day Platts' Gas Daily was full of stories about regulation and enforcement actions regarding market manipulation.

While Brian Hunter, ex-gas trader at now-defunct Amaranth Advisors, calmly explained to a FERC administrative law judge on Thursday the whys and wherefores of his now infamous trades in the spring of 2006, the NYMEX contract sunk to a seven-year low.

At the same time, the Commodity Futures Trading Commission continued to press for stricter controls of the futures market, with its chairman saying no one, producer or end-user, large or small, should be exempt from new clearing rules. The CFTC just wrapped up a series of hearings to determine whether it should set trading limits in energy products.

Should one admit this? Some of us have pretty clear, and fond, memories of something called S&H Green Stamps. Our mothers would get sheets of them for purchases at the supermarket, and we would spend stupid amounts of time licking them and pasting them into S&H booklets. We would then go to the Green Stamps redemption store and buy something glamorous because it was "free": a toaster, a mixer, maybe a vacuum cleaner if you saved up a big stack.

Not everyone would agree, but part of the charm was the labor of licking and pasting, and the tactile satisfaction of the fat little books piling up in a corner. "Virtual" collecting may be as satisfying to many, and it's that notion driving the idea for a green stamp program in Connecticut -- aimed at helping people buy energy efficient appliances and products.

The gas industry is looking at the still-to-be-written Senate climate change bill, and wanting to win in it some provisions to ensure gas quantifiable benefits in the intended lower-carbon energy picture.

Taking former Senator Tim Wirth up on his challenge at last month's Colorado Oil & Gas Association, the gas sector is enlisting lawmakers on its behalf. The coal industry "did a great job of lobbying," Skip Horvath of the Natural Gas Supply Association told our colleague Cathy Cash last week. "Coal did a great job and we didn't. You're going to see more of a gas presence in the Senate."

Chevrolet's gasoline-electric hybrid vehicle, the Volt, attracted dozens of articles and blog posts Tuesday marveling at its stated city mileage of 230 miles per gallon. A smashing figure. Even more intriguing, though, was General Motors' statement that the sticker may also carry another measure: 25 kilowatt-hours per 100 city miles.

If that happens, the vehicle would be the first to express its fuel economy in electrical terms, and it feels like a milestone: KWh on a sticker price.

What's bringing the conservative who helped pay for the Swift-boating of presidential candidate John Kerry into the same room as the unreconstructed liberals?

Shale gas.

Making wind power work in an integrated power system is a challenge that grows as the amount of wind resources rises. Hardly news, and it's hardly news, either, that natural gas plants are an easy and obvious solution to the intermittency problem that grid operators deal with.

California already has 1,000 MW of wind generation in its system, and more is coming. So the state's independent system operator is wrestling with the best way to deal with it, and with the increasing amount of solar energy expected to come online. Now, the ISO dispatches gas turbines to take up the slack when the wind dies down.

But ISO executive Steve Berberich thinks gas isn't the way to go.

Insouciant? FERC? The 7th Circuit US Court of Appeals has said so, and it makes for a delightful picture. The Federal Energy Regulatory Commission as a Parisian devil-may-care, stirring in some of us a vague, sweet longing for a summer of lazy ripostes on the Left Bank.

The Chicago court didn't describe FERC as an insouciant agency, of course. But its refreshingly plain-English opinion on August 6 did apply "insouciance" to the approach FERC took to approving PJM Interconnection members' chosen method of sharing the cost of building new extra-high-voltage transmission lines.

Applying a PJM-wide pro rata cost allocation the way FERC did it is just not OK, two of the three judges said in a ruling that appears to have thrown a pall of uncertainty over transmission investment.

Lining the walls of the Commodity Futures Trading Commission's public hearing room are photographs of its former chairmen and women, and one particular section of this display catches the eye. Beside the double doors of an auxiliary exit is a small strip of wall just wide enough to house two portraits: former CFTC heads Brooksley Born and Mary Schapiro.

While certainly noteworthy over their tenure (Schapiro served as chairman from October 1994 to January 1996, while Born, eschewing the traditional masculine title, was chairperson between August 1996 and June 1999), their names have lately become more synonymous with the current financial-market reforms.