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Regulators Forum: Taming the Utility Frontier

Policymakers are setting sights on new challenges facing utilities.

Fortnightly Magazine - November 2006

How can FERC help them in their efforts?

Wellinghoff: We certainly need supply diversity, and as part of that we need to include distributed and renewable resources. FERC needs to recognize the different characteristics of those resources when it is considering interconnection and integration in markets. Those differences need to be understood so those entities are not discriminated against in the markets, and we can ensure we have a full diversity of resources. That’s how FERC can participate—to look at how utilities can better utilize distributed and renewable energy resources.

With respect to overall infrastructure investments and their impacts on climate change, utilities can build infrastructure as efficiently as possible, using the most efficient equipment—including transformers, compressor stations, and even pumps and motors in LNG facilities. To the extent this infrastructure can be made more efficient with new construction and retrofits, it will reduce the impact on climate change.

FERC definitely has a role through our oversight of facilities like pipelines and LNG facilities, and through our environmental-review authority. The National Environmental Policy Act (NEPA) mandates consideration of alternatives, including technology that is more efficient than that being proposed. We have a larger role to play with respect to project review, to ensure efficient systems are incorporated into project plans.

Fortnightly: What about encouraging the transition to next-generation technologies, such as IGCC?

Wellinghoff: I don’t see a direct role for FERC, except to the extent a gasification facility would be different from other generation plants, and FERC has authority to ensure the facility is not discriminated against in terms of interconnection and integration into the grid. But ultimately the responsibility is in the purview of DOE, through grants under EPACT for private entities to build IGCC facilities.

Wyoming: The Energy Frontier

Gov. Dave Freudenthal (D-Wyoming)

Fortnightly: What do you see as the most important energy issues and challenges for Wyoming? What policy priorities follow from these factors?

Freudenthal: We have immense energy resources in Wyoming, including oil, gas, coal, wind, uranium and oil shale. As demands for energy continue to grow, Wyoming will continue focusing on how our energy resources are utilized in a way that is good for the country and the state.

We start with the premise that energy resources from Wyoming will be sold into other markets, we will get the full value for those resources and that value won’t be constrained by transportation capacity.

Next, we ask how we can build our economy and provide energy for other states. The answer is to convert more of the energy content in the state to things like electricity or liquid fuels. Plants using the new coal combined-cycle technology probably won’t begin operating until after my term ends, but it’s my job to make sure we set the right climate to get [IGCC] plants built.

Also we have to ask how we get the power lines built. There will be more communication between energy-producing states and energy-consuming states on how we will regulate multi-jurisdictional projects. Siting, permitting and cost allocation become very delicate issues. Each state feels obliged to ship costs