Forget the mega merger as a means to acquire new power plants. FERC’s new rules may offer a better path.
Industry hopes its centralized assets aren't in the crosshairs.
When the topic of U.S. energy security comes up, OPEC typically springs to mind. Sure enough, following the Sept. 11 attacks on the World Trade Center and Pentagon, politicians and energy executives quickly rallied before the public for less reliance on oil supply from OPEC member nations, and for bolstering domestic energy production.
Some politicians saw the timing as perfect to promote the Bush administration's agenda to open environmentally sensitive areas-including the Arctic National Wildlife Refuge (ANWR) in Alaska-to oil and gas production. They pointed to the fact that, as of this past summer, the United States relied on imports for 57 percent of its oil supplies, and that 25 percent of these imports came from the Persian Gulf. Saudi Arabia, whose oil accounts for 14.5 percent of U.S. imports, could face instability from militants angry over U.S. military attacks on fellow Muslim countries, thereby jeopardizing U.S. access to oil in the country.
At the same time, other Republican backers of opening ANWR to production, most notably Sen. Frank Murkowski, R-Alaska, showed restraint, stating that the time was not appropriate to advance the ANWR issue, given the circumstances in New York and Washington, D.C. Some industry executives also backed away from commenting on the ANWR controversy, fearing they would be viewed as opportunists.
Consensus on Safeguards
While timing appears to be a divisive issue among interested parties on ANWR, another energy security provision-safeguarding the nation's existing energy infrastructure-has received almost unanimous support inside the Beltway.
Immediately after the attacks, electric utilities implemented emergency plans to protect transmission lines and generating stations, particularly nuclear power plants. The North American Electric Reliability Council (NERC) ordered utilities to implement emergency procedures. At the same time, Energy Secretary Spencer Abraham placed the energy industry on condition 2 alert, second only to condition 1, forcing plants and pipelines to tighten their security.
Preparation work two years earlier for the Year 2000 computer bug came in handy as electric utilities, in the Sept. 11 aftermath, sought to assess their infrastructure from top to bottom. The Edison Electric Institute (EEI) said its utility members had an easier time reviewing physical conditions of their electric transmission grids, as well as generating assets, because of the Y2K measures.
While preparing their systems for Y2K, the utilities developed procedures for locating and correcting disturbances throughout their systems. Equally important, during the Y2K preparations, the energy industry had formed strong ties with government agencies.
In the wake of the attacks, EEI convened a task force of utility chief executives to assess protection for transmission lines and key facilities. The association held an initial task force meeting one week after the attacks, bringing together 25 top utility CEOs from across the country.
"They decided to reinstate our Y2K network of information sharing," EEI spokesperson Jayne Brady says. Along with scrutinizing every detail of their operations, utilities also are "beefing up current security practices." She emphasizes, though, that while utilities have considerable experience dealing with natural disasters such as hurricanes and winter storms, there have