» Cyber security and the power grid: Of all
the issues on the list, this is probably the closest that Congress could actually come to agreement on. It is easy to put an “enemy’s face” on cyber security matters. National security has a way of bridging partisan politics. Specific guidelines to protect our infrastructure would ensure better future security. » Natural gas and hydraulic fracturing:
This feeds into the generation mix of future power. Currently, fracking regulation is being driven by the states, but the federal government is clearly looking for ways to assert its jurisdiction. Right now, fracking and water-quality issues are mostly based on state laws that specifically pertain to mineral ownership. State geographies differ greatly, as do constituencies. This is a broad list of topics we should be actively discussing, and, of course, other topics could be added. Such an overall policy could provide enough guidelines—or boundaries, if you will—that it gives a reasonable test for various proposed solutions. These guidelines could be helpful for anything from an EPA proposal to a local electric co-op board decision.
Single-Fuel Dependence It is great that today’s natural gas technologies appear to be offering hope of fuel independence for many decades to come, perhaps the next century. The United States could find itself a net fuel exporter. However, we also seem to be going down a path toward single-fuel dependency. Fuel diversity has always been a hallmark of most utilities. They understand that prices can be volatile and that events— such as hurricanes or accidents—can instantly alter supply availability. Flexibility in fuel choice equates to lower and more affordable rates to customers. In short, it is one way of being a good steward of these resources. However, we seem to be disregarding many of the lessons of the past and instead are going full throttle for natural gas. We are doing this despite some limitations on our current pipeline transmission infrastructure, plus wild swings in prices on the spot market, such as what we witnessed in New York City in January. But an energy policy, framed by Congress, could outline some general guidelines on fuel diversification. It could discuss targets for natural gas, nuclear, coal, renewables, hydro, geothermal and biomass, and even make statements toward undeveloped technologies such as wave and tidal energy. That could provide many answers and future direction.
Incentives We’ve used incentives as a carrot to launch wind and solar. For instance, without production tax credits and investment tax credits—along with RPS—we simply would not see the large number of wind and solar farms scattered throughout the Midwest and Southwest. Wind and solar would still be fledgling industries.
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elec tric energy | summer 2013
Let’s say we had a congressional policy framework stating that X percentage of the country’s energy would come from renewables by Y date. That would be a policy that would provide direction. We can then devise strategies and incentives for meeting those goals and implement tactics to get us on that path. Greenhouse gas (GHG) reduction and carbon taxes are another example. GHG reduction is an offshoot of climate change and global warming legislation. It is clear the regulations put forth by the current administration are bent on disenfranchising fossil fuel. So if we’re going to penalize fossil fuel, wouldn’t it make sense to likewise incentivize ways to make carbon capture and sequestration (CCS) a commercial reality? If the intent is to allow “clean” coal with CCS, then offer more incentives to advance CCS technologies so that coal can once again be economically used. As it stands, CCS takes a 30 percent auxiliary load from power generation, which is too much power for a plant to lose and still be profitable. Experts say auxiliary load should be at about 15 percent to make it commercially viable. So can we provide some incentives to boost CCS research and technology advancement? An energy policy could provide some guidelines for incentivizing and making CCS work. Interestingly, Black & Veatch’s current Energy Market Perspective, which takes a 25-year look at future energy supply and pricing, is based on projecting a carbon tax starting in 2020 at $13 a ton. Proposed new-build carbon emissions standards by the EPA are out of reach for coal without CCS, but they come just under the threshold for natural gas combined-cycle plants. Over the past several years, tax credits have been very effective in boosting various technologies. My hesitation with them is that their use means the government is picking technology winners and losers. But even if we extended tax credits long enough to push renewables to a 20 percent U.S. market share (we’re currently at about 5 percent, not counting hydropower), what about the remaining 80 percent? Tax credits can only go so far.
Cross-State Transmission Lines One hot topic being debated within the industry is whether there should be easier permitting for transmission lines that need to cross state lines. What should the Federal Energy Regulatory Commission’s (FERC) role be in this issue? We have a power grid in this nation that must be expanded in order to gain more reliability and assist flexibility in times of devastating storms, such as Superstorm Sandy. FERC is trying to get the country integrated into a national electric grid. The agency wants a more efficient grid and new transmission lines, which it sees as critical to the economy. There are attempts to streamline permitting. To make a national grid, there must be effective state interaction, or a “bigpicture” decision by FERC. But this has become a “state versus the federal government” issue. States want to retain control over large transmission lines and right-of-ways, as well as environmental permitting.