(November 2009)Regulators are in the unenviable position of determining an allowance for ROE that’s fair to consumers and investors in a volatile economy. The cases that stand out this year...
Regulators Forum: Taming the Utility Frontier
Policymakers are setting sights on new challenges facing utilities.
resources is the primary focus. We have our backbone nuclear plants and we rely heavily on coal. But because of the problems of those two particular generation sources, we have to focus on new technologies including IGCC. We have an abundant resource with coal, but we have to face facts that there is carbon management coming around the corner, and building new conventional coal plants carries significant risk. We have to start figuring out a way to integrate the new technology and create a more diverse portfolio of resource options.
We have a very sophisticated and long-standing IRP program in Minnesota. For something like 20 years, the IRP process has considered renewables and energy efficiency as resources, and we have legislation and policies that encourage new technology. We also have a very sophisticated wind resource here, and policies that require wind development and provide up-front recovery of certain wind investments.
We also had a docket recently in which the PUC determined Minnesota statutes would support a $10 million grant toward the development of an IGCC plant in the state. (MN PUC Docket: E-002/M-03-1883) .
Fortnightly: What role should electric and gas utilities take in addressing the challenges of national energy security and climate change? How can state utility commissions help?
Reha: My feeling is that we have a lack of leadership on climate change, and utilities, including Xcel Energy, are asking for more leadership. Others are rushing to build conventional coal plants to get under the wire before there is carbon management. I think that is very shortsighted.
Since we are not getting leadership on the federal level, lawmakers in the region need to talk to each other to figure out how we can develop regional leadership and cooperate to reduce greenhouse-gas emissions, and use resources in an environmentally friendly and efficient way.
We are working to find better ways to promote energy efficiency and eliminate disincentives for conservation. This is of paramount importance and we are working on it regionally.
Fortnightly: If a utility came to the Minnesota PUC with a vision to reduce greenhouse-gas emissions, and sought to pass through the costs, how might the PUC respond?
Reha: We certainly have the authority to approve that. If you look at the emissions-reduction statute and the IRP process, the state legislature has given us a lot of tools and a lot of direction telling us we should be favorably inclined to approve advanced-technology concepts.
I was in Europe with a Great Plains Institute program this summer, and we visited gasification projects in Holland and Germany. It was quite eye opening. They have a can-do attitude with respect to reducing greenhouse gas emissions, and they are working like crazy on these new technologies. I hope attitudes are changing in this country, and utilities and lawmakers are becoming more open to reducing greenhouse gases. If we can get adequate funding from the DOE, we can move forward.