Cambridge Energy Research Associates Chairman Daniel Yergin captures in a few words oil's extraordinary past. Might those words one day describe the next 100 years of natural gas development?...
Transmission on Trial?
Not hardly. The Court will review open access, but the ratepayer is the real defendant.
The late Supreme Court Justice William O. Douglas haunted my dreams in law school back in the 1970s—he seemed to win every case, even when he took the losing side—so I could only smile the other day when I saw that state public utility commissions (PUCs) in nine states had revived his ghost to aid them in one last ditch fight to defend their turf from the Federal Energy Regulatory Commission, which now regulates just about everything that matters in the electric utility industry.
The case I remember from my school days was . John Nassikas was chairman of the Federal Power Commission, the ancestor of today's FERC. The issue was simple: Since electric utilities in Georgia and Florida shared power with each other on a regular basis, with electrons crossing state lines whenever they pleased, how could anyone tell whether activities fell under federal or state control?
To the hearing examiner at the FPC, it was clear cut:
"If a housewife in Atlanta on the Georgia system turns on a light, every generator on Florida's system almost instantly is caused to produce some quantity of additional electric energy ...
"If sensitive enough instruments were available and were placed throughout Florida's system, the increase in generation ... could be precisely measured."
Thus, the FPC announced that any incidental commingling of electric power across state lines could invoke a federal interest, and the Supreme Court so ruled. But that didn't sit well with Justice Douglass, who fired off one of his signature dissenting opinions that seemed always to crop up on my exams. Douglass saw right away that the new FPC policy—a marked departure from the former practice of tracing actual flows—would put the state PUCs right out of business.
"The [FPC's] abandonment of the conventional test in favor of the commingled method will now mean that every privately owned interconnected facility in the United States (except for those isolated in Texas) is within the FPC's jurisdiction."
That was 1972. And the law has budged hardly a smidgen since then. But that may change, as the U.S. Supreme Court has agreed to hear two appeals that challenge FERC Order 888, the decision that introduced open access to electric transmission lines for all power producers and their customers.
YOU MAY HAVE READ ABOUT THIS ALREADY, BUT WHAT YOU'VE READ IS LIKELY DEAD WRONG. Put aside any thoughts of a referendum on FERC policy. This court likes to defer to agency expertise. Yes, the Justices will review the FERC order, but they have no intention of killing open access. That's here to stay. The Justices read the newspapers and watch the evening news. They can see, as well as you or I, that the whole nation needs more generating plants. And that requires an open grid to bring the power to market.
Instead, the Justices will likely focus on the Federal Power Act, signed in 1935. Anyone can see the law is broken. It presumes a bright